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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 week brings us the release of only three pieces of economic data that may affect mortgage rates, along with an FOMC meeting and Fed Chairman press conference. None of the economic data is of great concern, but the Fed events are a different story. Despite having only three economic reports of low or moderate importance, we still will likely see plenty of movement in the markets and mortgage rates this week.
There is no relevant economic news scheduled for release tomorrow, but we will probably still have an active day due the Greek election results from today. It appears that the New Democracy Party has won the election, which is the party that is expected to keep the current bailout agreement in place. That should be well received in the stock markets tomorrow, possibly pressuring bonds if we see sizable stock gains. It is too early to tell how this will play out in our markets tomorrow, but the reaction in other global markets so far has been favorable for stocks.
May's Housing Starts will be posted early Tuesday morning. This data tracks construction starts of new home projects. It is the week's least important report and likely will not affect mortgage rates unless its results vary greatly from forecasts. It is expected to show that starts of new homes rose slightly last month, indicating minor strength in the housing sector. That is basically bad news for the bond market and mortgage rates because a weak housing sector makes a broader economic recovery less likely. However, this data is not important enough to cause a noticeable change in mortgage rates.
Wednesday's only event is the 12:30 PM adjournment of the FOMC meeting that began Tuesday. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting, but there is some hope in the market that we are getting closer to another move by the Fed such as QE3. If the statement gives any hint of change in their current forecasts when they expect to adjust key short-term interest rates or do something to spur economic growth, we could see a sizable change to mortgage rates Wednesday afternoon.
Also worth noting is that the FOMC meeting is ending earlier than the traditional 2:15 PM because it is one of the meetings that will be followed by a press conference hosted by Fed Chairman Bernanke. The meeting will adjourn at 12:30 PM while the press conference will begin at 2:15 PM and will probably lead to afternoon volatility in the markets and mortgage rates Wednesday.
Thursday has two pieces of data that we need to watch, both coming at 10:00 AM ET. The first is May's Existing Home Sales report from the National Association of Realtors. This report tracks resales of existing homes, giving us a measurement of housing sector strength. It is considered to be moderately important to the markets, but can influence mortgage rates if it shows a sizable difference between forecasts and actual results. Analysts are currently expecting to see a decline in sales, pointing towards a weakening housing sector. That would be good news for the bond market and mortgage rates since a weaker housing sector makes overall economic growth more difficult.
May's Leading Economic Indicators (LEI) will also be posted at 10:00 AM Thursday. The Conference Board, who is a New York-based business research group, will post this data. It attempts to predict economic activity over the next three to six months. Good news for mortgage rates would be a decline in this index, but it is expected to show no change from April’s reading, meaning it is predicting little economic growth over the next several months.
Overall, Friday will likely be the quietest day of the week unless the stock markets stage a rally or sizable sell-off. The most active should be Wednesday with the FOMC meeting adjourning or tomorrow due to this weekend’s Greek elections. It is likely going to be another active week for the markets and mortgage rates, so please proceed cautiously 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... Lock 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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