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If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.
Tuesday’s bond market has opened in positive territory again despite stock strength and stronger than expected economic data. The stock markets are posting sizable gains during early trading with the Dow up 92 points (setting a new high for the year) and the Nasdaq up 22 points. The bond market is currently up 6/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point.
The Conference Board said late this morning that the Consumer Confidence Index (CCI) rose to 65.4 this month, exceeding analysts’ forecasts of a 64.4 reading. This means that surveyed consumers were more optimistic about their own financial situations than many had thought. This is bad news for the bond market and mortgage rates because it could indicate that consumers are more likely to make large purchases in the near future since they are less concerned about their jobs and investments. Since consumer spending makes up two-thirds of the U.S. economy, it translates into stronger economic growth that makes bonds less appealing to investors. Fortunately, the news has not caused much concern in this morning’s trading.
Tomorrow morning has a couple events we need watch closely. The first is March's Durable Goods Orders that will be released early tomorrow morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. These are products that are expected to last three or more years, such as appliances and electronics. Current forecasts are calling for an increase in new orders of 1.8%. This would be a sign of manufacturing sector growth, but this data can be quite volatile from month-to-month. Therefore, a small variance between forecasts and the actual results will not heavily influence the markets or mortgage rates. A decline would be considered good news, while a large increase would indicate manufacturing sector strength. A sign of solid manufacturing growth could lead to higher mortgage rates tomorrow morning.
The second event of the day is the 5-year Treasury Note auction. If the sale is met with a poor demand from investors, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, a strong sale would likely make bonds more attractive to investors and bring more funds into the bond market. That buying of bonds would probably translate into lower mortgage rates. Results of the auction will be posted at 1:00 PM ET, so look for any reaction to come during afternoon hours.
The final one could be the most influential on the markets and mortgage rates. The FOMC meeting that began today will adjourn at 2:15 PM ET tomorrow afternoon. It will likely yield an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the post-meeting statement. There appears to be more and more discussion about when the Fed will have to start raising key interest rates to prevent inflation from strengthening. If the statement gives any hint of when that may be, or there is a change in the regular canned portions of the statement, we could see a sizable change to mortgage rates tomorrow afternoon.
I am expecting a fairly active day in the markets and mortgage pricing tomorrow, and not just during morning hours. If still floating an interest rate and closing in the immediate future, please proceed cautiously into tomorrow’s events.
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.
Empire Home Mortgage Inc. is a registered Mortgage Broker with the NYS and Fl Banking Depts and our loans are arranged through third party providers.
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