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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 sharply higher due to another round of stock selling that has drawn more funds into bonds as a safe haven. The stock markets are reacting negatively to a surprising event from Greece regarding their financial bailout and other global economic concerns. The result is another 266 points shed from the Dow after it lost 276 points yesterday. The Nasdaq is in similar shape, down 61 points. The bond market is certainly the beneficiary of this volatility, currently up 40/32, which should improve this morning’s mortgage rates by approximately .375 - .500 of a discount point over yesterday’s morning pricing.
This morning’s economic news only helped support today’s bond buying. The Institute for Supply Management (ISM) announced late this morning that their manufacturing index fell to 50.8 last month. Analysts were expecting to see an increase to 52.1, meaning that manufacturer sentiment was weaker than many had thought in October. That makes the data favorable for the bond market and mortgage rates because it points towards a softening manufacturing sector, which in turn means a broader economic recovery will be more difficult.
This week's FOMC meeting is a two day meeting that began today and adjourns tomorrow afternoon. There is no possibility of the Fed changing key short-term interest rates this week. But market participants will be looking at the post meeting statement for any indication of when the Fed may make a move, particularly to help boost economic activity. This is especially true following recent concerns about the global economy. The meeting will adjourn at 12:30 PM ET tomorrow, so look for any reaction to the statement to come during afternoon hours. The markets will actually be looking for news of another round of debt purchases by the Fed. If they do announce a sizable purchase program of government or mortgage debt Wednesday, we could see the bond market rally and mortgage rates move noticeably lower.
At 2:15 PM ET tomorrow, Fed Chairman Bernanke will host a press conference to answer questions about the Fed’s action (or lack of). These scheduled press conferences are new and just started this year. They are held four times a year, in an effort to keep the public current on the Fed’s thoughts and concerns. Since the minutes to the meetings aren’t released for a couple weeks after the FOMC meetings, these press conferences allow the press to interact directly with the Fed and in a much more timely manner. Therefore, expect the markets to react to his comments and any surprise answers during the Q&A portion.
There is no important governmental economic data being released tomorrow, but we will get a couple of private sector employment related reports. The primary one is payroll processor ADP’s monthly employment change numbers. If there is a significant surprise in their numbers, we may see the markets react during morning trading. However, I suspect that all eyes will be on overseas news and the Fed’s events tomorrow.
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 New York and Florida State Banking Departments and our loans are arranged through third party providers.
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