If you are considering locking in a mortgage rate for a New York or Florida property, consider this post.
Thursday's bond market has opened down slightly after this morning's economic data gave us mixed results. The stock markets are relative flat with the Dow and Nasdaq both up a couple of points. The bond market is currently down 4/32, but we will still likely see an improvement of approximately .125 - .250 of a discount point in this morning's mortgage rates due to strength late yesterday.
The first of today's two monthly releases was September's Producer Price Index (PPI). The Labor Department said that the overall PPI reading rose 0.4% and that the core data rose 0.1% last month. The overall reading was higher than forecasts of a 0.2% increase, meaning prices paid by producers rose more than thought. That is bad news for the bond market because it signals inflationary pressures that could be passed on to the consumer. However, the more important core reading that excludes more volatile food and energy prices matched forecasts. Therefore, it has had litt le impact on this morning's mortgage pricing.
August's Trade Balance report was also posted this morning, revealing a $46.3 billion trade deficit. This was larger than the $44.5 billion that was expected, but since this data is over a month old and is not considered to be highly important to the markets, it has not influenced this morning's rates.
Lastly, the Labor Department also said that 462,000 new claims for unemployment benefits were filed last week. This was a higher number than many had expected, which can be considered good news for the bond market. Rising claims signal a weakening employment sector that has been a point of concern for the Fed and market analysts. Unfortunately, since this data tracks only a single week's worth of new claims, it often does not affect mortgage rates unless there is a significant surprise in the total.
Also worth noting is today's 30-year Bond auction. Yesterday's 10-year Note sale did not go as well as recent sales did. At best we can consider it below average or average, meaning investor interest was not as strong as many had hoped for. Despite this though, the bond market did well during afternoon trading after the Fed announced that they would be buying $32 billion in additional government debt over the next month. The news made bonds more attractive to investors, but the truth is that the amount the Fed will be purchasing is relatively small and should have no long-term impact on the markets or mortgage rates. This takes us back to the today's 30-year Bond auction. If investor interest in today's sale is not strong, I believe yesterday's Fed news will be forgotten and the gains that we saw during late trading will be erased.
Tomorrow has three reports scheduled that are relevant to mortgage rates. The early two are extremely important to the markets and could lead to a sizable move in mortgage pricing tomorrow. The first is September's Retail Sales report that measures consumer spending. This data is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Therefore, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales would fuel optimism about the economy and would likely lead to a stock rally that hurts bonds prices and pushes mortgage rates higher. Current forecasts are calling for a 0.4% increase in sales. Good news for the bond market and mortgage pricing would be a smaller increase.
Tomorrow's second major economic release is September's Consumer Price Index (CPI). It measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.2% in the overal l index and an increase of 0.1% in the core data reading. A larger than expected increase in the core reading could raise inflation concerns in the bond market and push mortgage rates higher. Inflation is the number one nemesis of the bond market because it erodes the value of a bond's future fixed interest payments. When inflation is a threat, bonds sell for discounted prices that push their yields higher. And since mortgage rates tend to follow bond yields, this leads to higher rates for mortgage borrowers. This is one of the most important reports we see each month, so its impact on mortgage rates could be significant.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. Good news for the bond market would be a sizable decline in consumer confi dence, but due to the importance of the day's other two reports, I suspect this data will have little impact on mortgage rates. It is expected to show a reading of 68.5, up slightly from September's final of 68.2.
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... 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.
If you are looking for a mortgage in New York or Florida, consider Empire Home Mortgage Inc. We answer our phones seven days a week. Put us to the test! Our number is (321) 984-3366. Visit our website, www.empirehomemortgageinc.com . You can get answers to all of your financing questions. We have over 15 years experience and can suggest ways for you to improve your credit. We will even pay for your property appraisal at the closing table.
We are a registered mortgage broker with the New York and Florida State Banking Departments and our loans are arranged through third party providers.
Comments(0)