April 16th, 2010 5:28 PM by Lehel S.
Friday's bond market has opened in positive territory following early stock selling and weaker than expected economic news. The stock markets are showing significant weakness with the Dow down 104 points and the Nasdaq down 24 points. The bond market is currently up 7/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.
It appears that the stock markets may fall further, which should help boost bond prices throughout the day. I would not be surprised to see the major stock indexes move lower than current levels sometime today. If this is accurate, the bond market should benefit as investors seek safety from the volatility and I would not be surprised to see mortgage rates revise lower sometime this afternoon.
March's Housing Starts was posted early this morning, showing that new construction starts rose 1.6% last month. This was a larger increase than was expected, giving us a sign of housing sector strength. However, this data is not considered to be highly important to the markets or mortgage rates and has not influenced this morning's rates.
The second report of the day came from the University of Michigan who announced that their Index of Consumer Sentiment fell to 69.5 this month. This was well below forecasts of a 75.0 reading, meaning that consumers felt much worse about their own financial situations than many had thought. That usually translates into consumers delaying making a large purchase and helps limit economic growth. This is good news for the bond market and mortgage rates.
Next week is moderately busy in terms of relevant economic data being released. There are a couple of important reports scheduled, including a very important inflation index. Unlike most Monday's there is data being posted Monday that may influence mortgage pricing. March's Leading Economic Indicators (LEI) will be released late Monday morning. Look fo r more details on this report and the rest of next week's events in Sunday's weekly preview.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.