Our Real Estate Blog

Mortgage Rates (6/17/2010)

June 17th, 2010 11:20 AM by Lehel S.

Thursday's bond market has opened in positive territory after this morning's economic data gave us favorable news and the stock markets are showing early losses. The Dow is currently down 58 points while the Nasdaq has lost 11 points. The bond market is currently up 12/32, which should improve this morning's mortgage rates by approximately .250 of a discount point over yesterday's morning rates.

May's Consumer Price Index (CPI) was this morning's big news. It revealed a 0.2% decline in the overall index and a 0.1% increase in the more important core data. The overall reading was weaker than expected but the core reading matched forecasts. This means inflationary pressures at the consumer level of the economy were not stronger than expected. That is good news for bonds and mortgage rates.

May's Leading Economic Indicators (LEI) was posted late this morning, showing a 0.4% increase. This was slightly below forecasts, indicating that economic act ivity may not expand quite as much as many had thought over the next several months. This is also good news for bonds and rate because rapid economic growth usually raises inflation concerns that make bonds less attractive to investors and leads to higher mortgage rates. However, this data is considered to be only moderately important to the markets and its impact on today's rate has been minimal. 

Also posted this morning were weekly unemployment figures from the Labor Department. They announced that 472,000 new claims for unemployment benefits were filed last week. This exceeded forecasts and hints that the labor market is still far from a recovery. Unfortunately for mortgage rates, this data is not considered to be highly important because it tracks only a single week's worth of claims.

There is no relevant economic data scheduled for release tomorrow, but it is a fairly important day for stocks. Tomorrow is ?quadruple witching? which has to do with stock option expirations that must be executed by tomorrow. It really has no direct relation to the bond market, but the higher than normal volatility in stocks on these days can influence the broader markets. Sometimes that may lead to funds being moved into or out of bonds, however, it usually does not affect mortgage rates unless the swings in the major indexes are significant.

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 June 17th, 2010 11:20 AM



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