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Visit our website, www.empirehomemortgageinc.com . There you can get answers to all of your financing questions, view rates and search for foreclosed properties.** If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.
Friday’s bond market has opened in negative territory yet again, due to stronger than expected employment data. The stock markets are having somewhat of a peculiar reaction to the news with the Dow up 54 points but the Nasdaq is down 10 points. The bond market is currently down 22/32, pushing the 10 year yield to 2.07%. This will likely lead to an increase in this morning’s mortgage rates of approximately .250 of a discount point.
The Labor Department announced this morning that the unemployment rate remained at 9.1% last month, as it was expected to. The surprise came in the number of new payrolls added to the economy. Today’s report showed that 103,000 new jobs were added in September and that August actually added 57,000 jobs when it was previously announced that there was a 0 net gain or loss in that month. The upward revision to August’s payrolls means that 160,000 new jobs have been added to the economy over the past two months. This total is a little stronger than the sum of the two month’s forecasts, but indicates that we adding jobs at a much slower pace than what is needed to bring down the unemployment rate.
Some of the report’s secondary readings such as average earnings and hours worked didn’t reveal any significant surprises. Overall, the data is negative for bonds and mortgage rates because it points towards some growth in the employment sector and eases fears of the economy slipping into another recession. However, the data is not exactly great news for the stock markets. We can discard the basic theory of what is bad for the bond market is good for stocks, at least for the day. The rally in stocks over the past couple days led me to believe that many were expecting a strong report this morning. It was not bad for stocks, but it certainly cannot be considered extremely encouraging news for the economy. At best, stock traders can look at it as "not bad news." That is probably why we are seeng a mixed reaction in the stock markets.
This morning’s bond losses pushes the 10-year yield well above 2.00%, which had been a pivotal point over the past couple months. If it remains above that threshold the next couple trading days, it may become a floor of support rather than a ceiling of resistance. That would be bad news for mortgage rates because it means we are likely to see the yield remain near its current level or possibly move higher. Since mortgage rates tend to follow bond yields, we would not be expecting to see mortgage rates improve much in the immediate future.
Next week is a holiday-shortened week for the bond market but not stocks. The bond market will be closed Monday in observance of the Columbus Day holiday, but the stock markets will be trading. This could lead to some additional volatility this afternoon as traders look to protect themselves over the long weekend. The week itself does not bring a significant number of economic reports for the markets to digest, however, we do get the minutes from the last FOMC meeting, a key consumer spending report and two Treasury auctions that are relevant to mortgage rates. Look for details on next week’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.
Empire Home Mortgage Inc. is a registered Mortgage Broker with the New York and Florida State Banking Departments and our loans are arranged through third party providers.