Our Real Estate Blog

Mortgage Rates (9/9/2010)

September 9th, 2010 9:31 AM by Lehel S.

Thursday's bond market has opened in negative territory yet again after this morning's minor economic data showed surprising results. The stock markets have reacted favorably to the data, drawing funds away from the bond market. The Dow is currently up 56 points, while the Nasdaq has gained 12 points. The bond market is currently down 28/32, which will likely push this morning's mortgage rates higher by approximately .375 of a discount point.

Both of this morning's economic reports showed results that varied greatly from forecasts. July's Goods and Services Trade Balance came in with a $42.2 billion trade deficit. This was well off of the $47.3 billion that was expected and is considered a sign of economic strength. However, this data actually affects the value of the U.S. dollar versus other currencies more than it directly impacts bond trading and mortgage rates. But a stronger dollar makes U.S. securities more appealing to international investors beca use their proceeds are worth more when sold and converted to the investor's domestic currency.

The Labor Department gave us today's second release and it did have a direct influence on the markets and mortgage pricing. They reported that 451,000 new claims for unemployment benefits were filed last week. This was well below expectations of 470,000, giving a slight glimmer of hope to stock traders that the employment sector may be improving. This was bad news for the bond market and led to this morning's strength in stocks that push mortgage pricing higher.

Yesterday's release of the Fed Beige Book did not bring any significant surprises. It pointed towards slowing economic conditions in many regions, but this news was not new to the markets. Recent economic releases and comments made by Fed members already painted that picture for the markets. In other words, it was practically a non-factor for mortgage rates yesterday.

We do have the 30- year Bond auction to watch for later today. Results of the sale will be posted at 1:00 PM ET, so any reaction will come during afternoon hours. Yesterday's 10-year Note sale went well by several measurements, leading many to believe that today's 30-year Bond auction will follow suit. If that's the case, we may see some improvement to rates this afternoon, but I am not expecting this sale to lead to a significant change in rates today regardless of its results.

There is nothing of importance on the calendar for tomorrow. This leaves the stock markets to drive bond trading and mortgage rates. If the major stock indexes move higher tomorrow, we can expect to see bond weakness again. The flip side is that stock weakness may lead to slightly lower mortgage rates.

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 cl osing 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 9th, 2010 9:31 AM



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