Our Real Estate Blog

Mortgage Rates (9/24/2010)

September 25th, 2010 2:47 PM by Lehel S.

Friday's bond market has opened in negative territory following stronger than expected economic data and sizable stock gains. The stock markets have reacted favorably to that economic news, pushing the Dow up 166 points and the Nasdaq up 40 points. The bond market is currently down 13/32, which should mean an increase in this morning's mortgage rates of approximately .125 - .250 of a discount point.

The Commerce Department gave us this morning's data with an announcement that Durable Goods Orders fell 1.3% last month. This was close to forecasts, but the bad news came in 2.0% increase if more volatile transportation-related orders are excluded. Durable goods are considered products that are expected to last three or more years, giving us a measurement of manufacturing sector strength. The sizable increase means that manufacturing activity was much strong than many had thought last month, excluding auto and airplane type orders. This is considered bad new s for mortgage rates because signs of economic strength make long-term securities such as mortgage-related bonds less attractive to investors.

Today's second report has had little impact on trading and mortgage rates. It showed that sales of newly constructed homes were flat between July and August when it was expected to post a small increase. Therefore, this data can be considered favorable for bonds because it does not show housing sector strength. However, this data carries little significance in the markets and has not influenced this morning's mortgage pricing.

Next week brings us the release of a couple of important economic releases, but none are scheduled for Monday. This will leave the stock markets to drive bond trading and mortgage rates until we get to Tuesday's news. Most of the data is scheduled for the latter part of the week, but we may still see movement in rates as a result of Tuesday's release. Look for more details on next wee k's events in Sunday's weekly preview.

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. 
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Posted by Lehel S. on September 25th, 2010 2:47 PM

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