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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.
Monday’s bond market opened in positive territory following early selling in the stock markets. The stock markets were reacting to renewed concerns about the European financial crisis, pushing the Dow down 148 points and the Nasdaq lower by 49 points. Bonds have benefited as investors shift funds into them to escape the volatility in stocks. The bond market is currently up 10/32, which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point over Friday’s morning pricing. Part of this morning’s improvement is a result of strength late Friday, so if your lender revised lower Friday afternoon, you may see only a minuscule improvement in this morning’s rates.
There is no relevant economic data being posted today, so if we see an intra-day change in mortgage rates it will likely be a result of a swing in the major stock indexes. If stocks remain close to current levels, bond prices and mortgage rates should follow suit. However, if stocks rebound from current level, recovering a good portion of their early losses, we could see a decline in bond prices and an upward revision to mortgage rates later today. However, further losses in the major indexes could create a slight improvement in mortgage rates.
The rest of the week brings us the release of five important economic reports in addition to two Treasury auctions that may influence rates. Only two of the five reports are considered to be of fairly high importance to the bond market and mortgage pricing. The remaining reports are considered to be of moderate or low importance and will likely not heavily influence mortgage rates.
The first data of the week will be April's New Home Sales data late tomorrow morning. This report gives us a measurement of housing sector strength and future mortgage credit demand. However, it is actually the least important release of the week and probably will not have much of an impact on mortgage pricing because it tracks only approximately 15% of all home sales. It is expected to show little change in sales from March’s level, meaning the new home portion of the housing sector was flat last month.
Overall, I think we have a fairly busy week ahead of us. The big report of the week is Wednesday's Durable Goods Orders. If Thursday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. There are also a couple of Treasury auctions that are worth noting. The 5-year Note sale is Wednesday and the 7-year Note auction will be held Thursday. Both may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors.
The bond market will close early Friday afternoon ahead of next Monday's Memorial Day holiday. With all this, there is a pretty good possibility of seeing mortgage rates change several times this week- especially if there is more volatility in the stock markets. Accordingly, please proceed extremely cautiously if still floating an interest rate.
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.
Empire Home Mortgage Inc. is a registered Mortgage Broker with the NYS and Florida Banking Depts and our loans are arranged through third party providers.
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