Friday's bond market has opened flat due to stock strength that is coming as a result of the Fed's rate announcement this morning. The Dow is currently up 164 points while the Nasdaq has gained 40 points. The bond market is currently nearly unchanged, but we will still see an improvement in this morning's mortgage rates of approximately .375 of a discount point.
The only economic news released this morning was the University of Michigan's Index of Consumer Sentiment for this month. It showed a reading of 83.3, which was much lower than the 88.5 that was expected. This indicates that surveyed consumers were less optimistic about their own financial situations than many had thought. That is good news for bonds and mortgage rates.
Today's big Fed news actually isn't much of anything. The Fed announced that they were lowering the Discount Rate .500% to address the market volatility and liquidity concerns. The Discount Rate is not the Federal Funds rate that is the headline rate that the Fed changes during FOMC meetings. That rate change affects many consumer rates such as credit cards, auto loans and home equity lines of credit. The Discount Rate is the rate that the Fed charges banks of overnight loans. It really doesn't affect mortgage rates or consumer oriented rates. Therefore, today's announcement really isn't big news.
Next week is fairly light in terms of economic releases, but we will get one important report later in the week. There is one piece of data scheduled for release Monday with July's Leading Economic Indicators being posted. But look for details on next week's events in Sunday's weekly preview.
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... Lock 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.
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