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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.
Monday’s bond market has opened in positive territory following a flat open in stocks. The major stock indexes are relatively calm considering Friday’s rally that pushed the Dow higher by 187 points. The Dow is currently up 22 points while the Nasdaq has gained 7 points. The bond market is currently up 3/32, but we will still likely see an increase in this morning’s mortgage rates of approximately .125 of a discount point due to weakness in bonds late Friday.
There is no relevant economic data scheduled for release today. Actually, today is the only day of the week that we don’t have something to watch or be concerned with. With the stock markets currently showing minor gains, concerns about them extending Friday’s rally have subsided, at least for the time being. This has helped buoy bonds and erase part of Friday’s late selling in bonds that cause some lenders to revise their pricing higher. As long as the major stock indexes remain near current levels, the threat of an intraday upward revision to mortgage rates should stay minimal.
This week brings us the release of six economic reports that may impact mortgage rates, some of which are considered to be highly influential to the markets and mortgage pricing. The first is 2nd Quarter Employee Productivity and Costs data early tomorrow morning. It will give us an indication of employee output per hour. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don't see this being a big mover of mortgage pricing, but it does have the potential to affect bond trading if it shows a significant surprise. Analysts are currently expecting to see an increase in productivity of 0.5%. A stronger than expected productivity reading could help improve bonds, possibly leading to slightly lower mortgage rates tomorrow.
June's Personal Income and Outlays data will also be posted at 8:30 AM ET tomorrow morning. This report helps us measure consumer ability to spend and current spending habits. If it shows sizable increases, bond selling could lead to higher mortgage rates. Current forecasts are calling for an increase of 0.4% in income and a 0.1% rise in spending. A larger than expected increase in income means consumers have more funds to spend, which is not favorable to bonds because consumer spending makes up over two-thirds of the U.S. economy. Ideally, we would like to see declines in spending and income, but the smaller the increase in each, the better the news for mortgage rates.
The third report of the day is the Conference Board’s Consumer Confidence Index (CCI) for July at 10:00 AM ET. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. If consumers are more confident in their own financial situations, they are apt to make large purchases in the near future. This is important because consumer spending makes up such a large portion of our economy. If the CCI reading is weaker than expected, meaning that consumers were less confident than thought and likely will delay making a large personal purchase, we may see bond prices rise and mortgage rates drop tomorrow morning. Current forecasts are calling for a reading of 61.0, which would be a lower reading than June's 62.0 and indicate consumers are becoming less comfortable with their finances.
Overall, I am expecting to see an extremely active week for mortgage rates. I think that the most important day is either going to be Wednesday due to the FOMC adjournment and the ISM index being posted or Friday with the release of the Employment report. We also have the European version of the FOMC taking place Thursday, so add that and stock swings to our list of potential market movers for the week. I suspect this will be an extremely active week for not only mortgage rates, but also the financial markets in general. If still floating an interest rate, I would definitely maintain constant contact with my mortgage professional as it is going to be an interesting week.
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.