What the Markets Are Doing Today:
Both the bond and stock markets opened in negative territory today. The stock markets then rebounded later in the morning.
- The Dow opened down 28 points from yesterday's close
- NASDAQ opened down 3 points from yesterday's close
- The 10 Year Treasury Bond opened down 10/32 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 6/32 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:
- University of Michigan's Update to their Index of Consumer Sentiment for April - This index revealed a reading of 65.1, and that is more than the expected reading of 61.5. This indicates that consumers were more comfortable with their own financial situations than many had thought. This can be considered a negative news for the bond markets because a higher level of confidence usually translates into increases in consumer spending.
- Factory Order for March - The Commerce Department reported that new orders for durable and non-durable goods fell 0.9% in March, which was a larger than expected drop. They also announced a sizable downward revision to February's orders (from a 1.8% gain to a 0.7% gain). This indicates that factory orders were weaker than expected over the past couple of months.
- Institute for Supply Management's (ISM) Manufacturing Index - The index showed a reading of 40.1 which exceeded forecasts by a couple of points. That means that manufacturers felt business had improved during the month than had said so last month. Since this means that manufacturing activity may be improving; this is considered bad news for bonds.
Important News of the Day:
Next week will be fairly light in terms of the number of economic reports scheduled for release. 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 today. 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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