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Rate Lock Advisory - Thursday Aug. 16th
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Thursday's bond market has opened in positive territory due mostly to early stock losses. The stock markets are reacting to more credit concerns and overseas losses with the Dow down 134 points and the Nasdaq down 22 points. The bond market is currently up 16.32, but we will still see an increase in this morning's mortgage rates of approximately .250 of a discount point.
The Commerce Department reported this morning that starts of new homes fell 6.1% last month, reaching a their lowest level since January 1997. This indicates that the housing sector is still weakening, which is good news for bonds. However, this data usually does not have much of an impact on mortgage rates and couldn't prevent this morning's increase in rates.
The Labor Department said that new claims for unemployment benefits rose to 322,000 last week, exceeding forecasts of 315,000. This is also good news for bonds and mortgage rates generally speaking, but this data is also considered to be of low importance since it tracks only a week's worth of claims.
There is one piece of relevant data scheduled for release tomorrow morning. The University of Michigan will release its Index of Consumer Sentiment for August at 9:45 AM ET. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending is likely to continue, we may see mortgage rates move higher tomorrow. Current forecasts are calling for a drop from July's 90.4 to a reading of 88.5.
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... Lock if my closing was taking place between 21 and 60 days... Lock 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.
©Mortgage Commentary 2007
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