What the Markets Are Doing Today:
The bond market opened in negative territory again this morning while stocks opened in mixed territory following a stronger than expected consumer sentiment report
- The Dow opened up 30 points from yesterday's close
- NASDAQ opened down 6 points from yesterday's close
- The 10 Year Treasury Bond opened down 8/32 from yesterday's close
- FNMA 30 Year 4.0% coupon down 2/32 from yesterday's close
Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed down 22/32 from its opening yesterday, and is down 2/32 in trading this morning. I expect that today's mortgage rates will worsen in pricing by 0.125% to 0.25% in discount points this morning.
Economic Reports Being Released Today:
- University of Michigan's Index of Consumer Sentiment - The consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. Today's release revealed a reading of 61.9, which is more than a reading of 58.5 that analysts were expecting. While this report does not normally have an impact on the markets, it does indicate that consumers are more optimistic about their own financial situations than some had previously thought. That can be considered negative news for bonds and mortgage rates because it means that consumers are more apt to make large purchases in the near future.
Important News of the Day:
Fed Chairman Bernanke will be making a speech today, but it's not likely to affect the markets or mortgage rates.
Next week is fairly light in terms of economic releases. Only one of the reports can be considered of high importance, and that is the Leading Economic Indicators (LEI) for March which will be posted on Monday. The LEI attempts to predict economic activity over the next three to six months, but is thought of as only a moderately important report. Look for more details on this next week's economic data releases and events on my Weekly Mortgage Market Watch on Monday.
What Happening With Mortgage Rates Today:
Moderate Volatility. We have a very active week ahead of us, so please proceed cautiously if you're still floating an interest rate. Overall, look for the most movement in rates the middle part of the week. The Retail Sales, PPI and CPI reports are the most important economic reports being released this week. Any of the three reports can cause significant movement in the markets and mortgage rates.
There's still continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations. That in and of itself may give rise to the concerns for inflation.
No one knows how long rates will stay down this time or if they'll go any lower. If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.
My Interest Rate Lock Advice for Today:
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 within 8 and 30 days
- Float if my closing was taking place between 31 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 any or all other borrowers.
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