Our Real Estate Blog

Mortgage Rates (7/16/2010)

July 16th, 2010 8:56 AM by Lehel S.

Friday's bond market has opened in positive territory again following another round of early stock losses. The stock markets are posting sizable losses after a couple of earning releases disappointed investors. This has the Dow down 168 points while the Nasdaq has lost 41 points. The bond market is currently up 13/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point.

The Labor Department announced early this morning that June's Consumer Price Index (CPI) fell 0.1%, falling slightly short of forecasts. However, the core data reading that excludes more volatile food and energy prices at the consumer level of the economy rose 0.2%. This was higher than the 0.1% increase that was expected. The overall reading can be considered favorable for bonds, but the more important core reading is negative news. Fortunately, the bond market has shrugged off the news and is taking its lead from the stock markets. 

The second report of the day was certainly favorable for bonds and mortgage pricing. The University of Michigan's Index of Consumer Sentiment came in at 66.5, falling well short of the expected 74.5 reading. This means that surveyed consumers were much less optimistic about their own financial situations than they were last month. Since declining consumer confidence usually translates into weaker levels of spending, this is definitely good news for the bond market and mortgage rates.

If the major stock indexes move lower and remain there during afternoon trading, there is a decent possibility of seeing another improvement to mortgage pricing later today. Stocks opened with sizable losses yesterday, but managed to regain most of those losses before closing. I don't believe we will see the same pattern today, but it is a possibility that is worth watching for. If stocks do rebound this afternoon, we could see an upward revision to rates because a good p ortion of this morning's improvement was a result of the early stock losses.

Next week is light in terms of economic releases, especially if comparing to this week. We have a couple of housing related reports and a future economic growth prediction index as the only relevant monthly reports. The big news will likely be Fed Chairman Bernanke's semi-annual testimony to congress about the state of the economy and monetary policy in the middle of the week. There is no relevant news or data scheduled for Monday, but look for details on next week's events in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Float 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 i s only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers. 
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Posted by Lehel S. on July 16th, 2010 8:56 AM

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