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Mortgage Rates (6/25/2008)

June 25th, 2008 4:50 PM by Lehel Szucs

Wednesday's bond market has opened in negative territory following early stock gains. The stock markets are trading in positive territory with the Dow up 74 points and the Nasdaq 39 points. The bond market is currently down 7/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

The Commerce Department gave us May's Durable Goods Orders this morning, announcing no change in orders for big-ticket items between April and May. This was expected and therefore had little impact on the bond markets or mortgage rates.

Also posted this morning was May's New Home Sales report. It showed a decline in sales of newly constructed homes between April and May, but to a level that was expected. With this data being considered of low importance and the fact that it came very close to analysts' forecasts, this data has been a non-factor in this morning's trading.

The FOMC meeting will adjourn at 2:1 5 PM ET today. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting, so the markets will be watching their post-meeting statement for any indication of the Fed's next move. Many analysts now think the Fed will need to raise key short-term interest rates before they make any further cuts. The statement likely will not give a clear definitive answer to this question, but it could help fuel theories by market participants that will cause plenty of volatility in the markets this afternoon.

I still think that we will hear words of concern about inflation in the economy as a result of high fuel prices. This could lead to higher mortgage rates this afternoon if accurate. Look for an update to this report after the markets have an opportunity to react to the announcement and post-meeting statement.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place w ithin 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock 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.

WEDNESDAY AFTERNOON UPDATE:

This week's FOMC meeting has adjourned with an announcement that no change was made to key short-term interest rates, which was the first time in the past nine months. This was widely expected, but the post-meeting statement did indicate concerns about inflation. This has helped push bond prices lower than pre-adjournment levels. However, they have not moved enough as of yet to likely cause afternoon revisions to mortgage rates. I am expecting most lenders to reflect these changes in tomorrow's rates.

The stock markets have improved from this morning's levels with the Dow 92 points and the Nasdaq up 48 points. The bond market is currently down 12/32. If bond prices fall much further, we may see upward revisions to mortgage rates by the end of business. If they remain near current levels, the increase will probably be reflected in tomorrow's pricing.

The Commerce Department gave us May's Durable Goods Or ders this morning, announcing no change in orders for big-ticket items between April and May. This was expected and therefore had little impact on the bond markets or mortgage rates.

Also posted this morning was May's New Home Sales report. It showed a decline in sales of newly constructed homes between April and May, but to a level that was expected. With this data being considered of low importance and the fact that it came very close to analysts' forecasts, this data has been a non-factor in this morning's trading.

The only relevant economic data scheduled for release tomorrow is the final reading to the1st Quarter GDP and weekly unemployment claims. The GDP data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Last month's first revision showed a 0.9% rate of growth, but analysts are expecting to see an upward revision to 1.0 %.

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... Lock if my closing was taking place between 21 and 60 days... Lock 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.


©Mortgage Commentary 2008

Posted in:General
Posted by Lehel Szucs on June 25th, 2008 4:50 PM

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