Our Real Estate Blog

Mortgage Rates (9/27/2010)

September 27th, 2010 8:40 AM by Lehel S.

Monday's bond market has opened in positive territory following early stock losses. The stock markets are starting the week by posting minor losses of 18 points in the Dow and 6 points in the Nasdaq. The bond market is currently up 14/32, which should improve this morning's rates by approximately .125 - .250 of a discount point.

There are no relevant economic reports being posted today, so we can expect the stock markets to drive bond trading and mortgage pricing until we get to tomorrow's data. If the major stock indexes move higher, investors may shift funds from bonds into stocks, leading to higher mortgage rates. However, if stocks extend this morning's losses, bonds and mortgage rates should benefit.

The rest of the week brings us the release of five relevant economic reports for the bond market to digest in addition to two relevant Treasury auctions. The first release is September's Consumer Confidence Index (CCI) late tomorrow morning. Th is Conference Board index will be posted at 10:00 AM ET, giving us a measurement of consumer willingness to spend. It is expected to show a small decline from last month's reading, indicating that consumers were less optimistic about their own financial situations than last month, therefore, less likely to make large purchases in the near future. This is good news for the bond market and mortgage rates because consumer spending fuels economic growth. Analysts are calling for a reading of approximately 53.0, down from August's 53.5. The smaller the reading, the better the news for the bond market and mortgage rates.

The Treasury will sell 5-year Notes tomorrow and 7-year Notes Wednesday, which will tell us if there is still an appetite for longer-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of each sale will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading tomorrow and Wednesday.

Overall, it is likely going to be a fairly active week in the markets and mortgage rates. The most important day will likely be Friday due to three reports being released, including the ISM index, but tomorrow's events can also heavily influence mortgage rates. This is one of those weeks that I recommend maintaining contact with your mortgage professional if still floating an interest rate.

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 27th, 2010 8:40 AM

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