Our Real Estate Blog

Mortgage Rates (7/13/2010)

July 13th, 2010 2:54 PM by Lehel S.

Tuesday's bond market has opened in negative territory following early stock strength. The stock markets are reacting favorably to last night's strong earning reports from Alcoa and CSX with the Dow up 154 points and the Nasdaq up 35 points. The bond market is currently down 8/32, which will like push this morning's mortgage rates higher by approximately .125 of a discount point.

May's Goods and Services Trade Balance report was posted early this morning. It showed a $42.3 billion trade deficit that was well above forecasts. This data usually does not directly influence bond trading, but does affect the value of the U.S. dollar versus other currencies. A strengthening dollar makes U.S. debt more attractive to international investors because the securities are worth more when sold and converted to their domestic currency. However, this is not a process that immediately affects mortgage rates.

The 10-year Treasury Note auction is taking place tod ay. Results of the sale will be posted at 1:00 PM ET today. If it was met with a strong demand from investors, particularly international buyers, we should see bond strength during afternoon trading. This could lead to downward revisions to mortgage rates. However, a lackluster interest in the sale could lead to broader selling and an upward revision during afternoon hours.

June's Retail Sales report will be posted early tomorrow morning. This data is considered to be of high importance because it measures consumer spending. Consumer spending makes up two-thirds of the U.S. economy, so any related data is watched closely. The Commerce Department is expected to say that sales at retail establishments fell 0.2% last month. A larger than expected decline in sales could help fuel a bond rally and lead to lower mortgage rates because it would mean that the economy is likely not as strong as thought. 

Also worth noting about tomorrow is the afternoon relea se of the minutes from the last FOMC meeting. There is a possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members during discussion and voting at the last meeting or give any indication of the Fed's possible next move with monetary policy.

If I were considering financing/refinancing a home, I would.... Lock 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. 
Posted in:General
Posted by Lehel S. on July 13th, 2010 2:54 PM

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