Daily Mortgage Rate Lock Advisory - 9-11-2007

Mortgage and Lending with The BIG Mortgage Co.

Tuesday's bond market has opened in negative territory following early stock market gains. The stock markets are currently rallying with the Dow up 135 points and the Nasdaq up 25 points. The bond market is currently down 5/32, but I don't believe we will see much of a chance in this morning's mortgage rates.

Today's only data was July's Goods and Services Trade Balance report that showed the U.S. trade deficit stood at $59.2 billion. This was very close to forecasts and due to the lack of attention this data gets directly by bond traders, it has not had an effect on this morning's trading.

There is no relevant data scheduled for release tomorrow or Thursday. Friday brings us the release of three pieces of news that could affect mortgage rates. In the meantime, there is a 10-year Treasury Note auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. But, if the sales are met with a decent demand from investors, those losses are normally recovered after the results are announced. The results will be posted at 1:00 pm ET Thursday. If demand was strong, particularly from international investors, we should see mortgage rates improve Thursday afternoon.

Due partly to a lack of data the next two days and a suspicion that we will see stock prices rise those days, I have shifted back to a lock recommendation for immediate and short-term periods. As a reminder, this does not necessarily mean that I think rates will move higher during those time frames. It simply means that the risk versus reward of continuing to float has shifted more towards the risk side.

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... Float 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.

©Mortgage Commentary 2007

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