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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.
Wednesday’s bond market opened down slightly despite weaker than expected economic data. The stock markets are showing relatively minor gains with the Dow up 32 points and the Nasdaq up 12 points. The bond market is currently down 2/32, which should keep this morning’s mortgage rates very close to yesterday’s levels.
April's Durable Goods Orders were posted early this morning, revealing a much larger decline than what analysts had expected. The 3.6% drop in new orders at U.S. manufacturers for big-ticket products indicates manufacturing sector weakness. This should be good news for the bond market and mortgage rates, but the markets don’t seem to be too impressed or concerned. I would have expected that much of a variance from forecasts (-1.6%) to have influenced bond trading and mortgage rates this morning.
Also today is the first of this week’s two Treasury auctions that can potentially impact mortgage rates. The Treasury will sell 5-year Notes today and 7-year Notes tomorrow. Tomorrow’s sale is a better indication of investor demand for mortgage-related securities, but since today’s is the first of the two, it can have a bigger influence on the broader bond market. If the sales are met with a good demand from investors, we could see bond prices rise and mortgage rates improve this afternoon and late tomorrow. But, if we see a weak interest in the auctions, bond selling may follow along with upward revisions to mortgage pricing. Results of the sales will be posted at 1:00 PM ET each day, so any reaction will come during afternoon hours.
Tomorrow’s economic data isn’t considered to be highly important. The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released at 8:30 AM. The second and final revision to this report comes next month but isn't expected to carry much importance. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best indicator of economic growth. Last month's preliminary reading revealed a 1.8% increase in the annual rate of growth. Analysts expect a slight upward revision to this reading with the consensus being a 2.0% rate of growth. If the upward revision is much stronger than expected, we may see the bond market react negatively and mortgage rates move higher because it would mean the economy was stronger than thought last quarter. However, a slight revision will likely not affect mortgage rates.
The Labor Department will give us last week’s unemployment figures early tomorrow morning. They are expected to announce that 400,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week and basically would be bad news for the bond market. Since this report tracks only a single week’s worth of new claims, it usually takes a surprise reading for it to cause movement in mortgage pricing. The larger the number of claims, the better the news for bonds and mortgage rates.
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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