What the Markets Are Doing Today:
The bond and Mortgage Backed Securities opened in negative territory while the stock markets opened in positive territory again this morning.
- The Dow opened up 102 points from yesterday's close
- NASDAQ opened up 37 points from yesterday's close
- The 10 Year Treasury Bond opened down 8/32 from yesterday's close
- FNMA 30 Year 4.0% coupon opened down 4/32 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 9/32 from its opening yesterday and is currently flat against yesterday's close. I expect that today's mortgage rates will worsen by 0.125 - 0.25 in discount points today.
Economic Reports Being Released Today:
- 1st Quarter Employment Cost Index (ECI) - Released by the Labor Department, the (ECI) showed a 0.3% increase during the quarter. Analysts are forecasting a rise of 0.5%. This was lower than forecasts, which is good news for bonds, and was the lowest increase on record. However, the data seems to be ignored by traders this morning.
- Personal Income & Outlays for March - Personal Income & Outlays for March revealed weaker than expected results. It showed a 0.3% decline in income and a 0.2% drop in spending. Both of these readings were a little weaker than analysts had expected. Forecasters expected a 0.2% decline in income and a 0.1% drop in spending. The lower the reading, the better the news for the bond and mortgage backed securities markets. so the data can be considered favorable to bonds also. But this morning's stock gains have made it difficult for bonds to move higher.
- Jobless Claims - 631,000 new claims for unemployment benefits were filed last week. This is lower than that 640,000 new claims of analysts were expecting. Continuing claims for unemployment continue to rise and jumped again to another record to 6.137 million. This indicates that it's taking more time for the jobless to find work. With more people unemployed, the threat of wage based inflation is subdued. Employers do not have to pay higher wages to attract new employees during high unemployment times as people will be happy just to have a job. However, this data is not considered to be of high importance to the bond or the mortgage backed securities markets.
- Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities (MBSs) by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $381 billion in MBSs. The Feds plan on purchasing up to $1.25 trillion in MBSs through December 31st.
Important News of the Day:
This week will be very active in terms of economic releases scheduled for release for tomorrow. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.
What Happening With Mortgage Rates Today:
Moderate Volatility. Look for plenty of movement in the financial markets and mortgage rates this week. We may also see noticeable changes in mortgage rates today and Friday. If the reports being released this week reveal weaker than expected economic conditions, the bond markets may rally and mortgage rates could fall.
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. See today's mortgage rates at www.LewCorcoran.com/RateSheet.
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