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If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.
This morning’s only economic data was the revision to the 1st Quarter Productivity and Costs data. It showed a stronger than expected decline in productivity of a 0.9% annual pace. This means U.S. workers were less productive per hour last quarter than previously thought, making the data unfavorable for bonds and mortgage rates. Fortunately, the data is not considered to be a highly important release, so its results have taken a back seat to this morning’s stock gains. That has helped prevent the data from negatively influencing mortgage rates.
We will get to see the Federal Reserve’s Beige Book this afternoon, giving us a snapshot of economic conditions in each Federal Reserve region. The report gets its name simply after the color of the binder it is presented in, but is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market should thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we could see mortgage rates revise higher this afternoon. My guess is that this report is much more likely to help lower mortgage rates than it is likely to cause upward movement.
Tomorrow has no important economic data scheduled for release, but we will get the Labor Department’s weekly update on unemployment filings at 8:30 AM ET. They are expected to announce that 375,000 new claims for unemployment benefits were filed last week, down from the previous week’s 383,000. That would signal a slightly improving employment sector, but unless we see a large variance from forecast, the data will probably have a minimal impact on bond trading and mortgage pricing. The higher the total number of new claims, the better the news for mortgage rates.
The focus of tomorrow’s trading will be Fed Chairman Bernanke’s testimony before a Congressional Joint Economic Committee late tomorrow morning. His outlook for the economy and potential economic stimulus can be highly influential on the markets and mortgage rates. It will be interesting to see exactly what he says and how much his outlook has changed in the recent weeks, especially after Friday’s disappointing Employment report. He is scheduled to testify at 10:00 AM ET, so we could see many lenders post rates later than usual to allow the markets to react to his prepared speech and the Q&A that follows. I think this event is more likely to benefit mortgage shoppers than lead to a spike in rates, but it is the week’s most important event so I recommend proceeding cautiously into it 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... Float 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.
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