May 20th, 2009 12:43 PM by Lehel Szucs
Tuesday's bond market has opened down slightly despite the release of a much weaker than expected housing report. The stock markets have had little reaction to the data with both the Dow and Nasdaq currently nearly unchanged from yesterday's close. The bond market is down 5/32, which should push this morning's mortgage rates higher by approximately .125 of a discount point.
The Commerce Department said this morning that April's Housing Starts fell almost 13% last month. This was well off of the small increase that was expected and indicates that the housing sector, particularly new construction, is still softening. This is fairly good news for bonds, however, this data is not considered to be highly important. Therefore, its impact on mortgage rates was minimal.
There is no relevant economic news scheduled for release tomorrow, but we will get to see the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy. The goal is to form a guess about when the Fed may make another move to help the economy. The minutes will be released at 2:00 PM ET, so if there is a market reaction to them it will be evident during afternoon trading.
Overall, I think it will be a fairly calm week for mortgage rates, at least compared to last week. We could see little movement in rates if the stock markets remain calm and the week's data doesn't reveal any major surprises. The FOMC minutes may lead to some volatility in the markets, but neither of the economic reports are of great concern.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock 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 on ly 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.
©Mortgage Commentary 2009