Our Real Estate Blog

Mortgage Rates (5/3/2010)

May 3rd, 2010 11:50 AM by Lehel S.

Monday's bond market has opened in negative territory following early stock strength. The stock markets are starting the week in positive ground after Greece accepted a bailout package that should help stabilize the country's financial system. The Dow is currently up 86 points while the Nasdaq has gained 14 points. The bond market is currently down 11/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point over Friday's morning pricing. 

There were two reports released this morning that were relevant to mortgage rates. The first was March's Personal Income & Outlays that showed a 0.3% rise in income and a 0.6% increase in spending. Both of these readings matched forecasts, minimizing its impact on this morning's bond trading and mortgage rates. February's readings were revised higher than previously estimated, but due to the age of that data it also has not influenced today's rates.

The second report of the day was one of the more important releases of the week. The Institute for Supply Management (ISM) posted their manufacturing index for April late this morning, announcing a reading of 60.4. This was slightly lower than forecasts but an increase from the previous month. This indicates that more surveyed manufacturers felt business improved during the month than last month. That can be considered negative for bonds, but since the reading did not exceed forecasts, its impact on the markets has been minimal.

March's Factory Orders data will be released at 10:00AM tomorrow, giving us a measure of manufacturing sector strength. It is similar to last week's Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a larger decline than the 0.1% that is expected could push mortgage rates slightly lower. But, a sizable increase in new orders could lead to slightly higher mortgage pricing tomorrow.

Overall, I believe Friday will be the most important day of the week with the employment data being posted. It can easily erase the week's accumulated gains or losses in mortgage rates if it shows any surprises. The middle part of the week will likely be the calmest, but I still suggest proceeding cautiously if still floating an interest rate. This would be a good week to maintain contact with your mortgage professional if you have not locked a rate yet.

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 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. 
Posted in:General
Posted by Lehel S. on May 3rd, 2010 11:50 AM

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