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The news is good for stocks as it points toward better economic growth, especially on the global level. The bad news is that we are seeing a traditional pattern of good for stocks is bad for bonds. The Dow is currently up 417 points while the Nasdaq has gained 82 points. The bond market is currently down 27/32, but believe it or not we will probably see little change in this morning’s mortgage rates, maybe even a very slight improvement. This is due to a second consecutive afternoon rally in mortgage bonds yesterday. As we saw Monday, bonds improved late in the day, causing some lenders to improve pricing during afternoon hours. This morning’s bond losses are erasing much of that intra day improvement, keeping this morning’s rates close to yesterday’s morning levels.
There was economic data posted this morning, but despite its’ results, it has not had an influence on this today’s mortgage rates. The revised 3rd Quarter Productivity numbers were posted early this morning, revealing a downward adjustment to productivity. The report showed that worker productivity rose at an annual rate of 2.3% last quarter, down from the previous estimate of 3.1% and lower than forecasts of 2.6%. That would make the data appear to be unfavorable for the bond market and mortgage rates. However, a downward revision to the labor cost portion of the report neutralized the data. Although, this report is not considered important enough to trump the big news about the central bank’s efforts regardless of its results.
Worth noting again is the afternoon strength in mortgage bonds the past two days. That could signal a couple different things, one being that we are at a strong level of support. That would mean that investors are working hard to prevent prices from falling below current levels, which translates into strength for mortgage rates. It is early to say that those efforts will continue or prevent rates from going higher in the near future, but the action has been noticed and will be watched for adjustments to interest rate predictions. For the time being, I am holding the conservative approach towards locking/floating an interest rate.
Tomorrow morning brings us the most important data of the week so far. This would be November's manufacturing index from the Institute for Supply Management (ISM) that will be posted at 10:00 AM ET tomorrow. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a small increase in sentiment from October to November. October's reading was previously announced as 50.8 and forecasts show a reading of 51.0. A weaker would be good news for the bond market and mortgage rates. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. The lower the reading the better the news for bonds because waning sentiment indicates a slowing manufacturing sector and makes a broader economic recovery less likely.
Also tomorrow is our weekly employment sector update from the Labor Department. They are expected to announce that 390,000 new claims for unemployment benefits were filed last week. This would be a small decline from the previous week’s 393,000, but it will take a large variance from forecasts for this data to have a noticeable impact on tomorrow’s mortgage rates. The monthly ISM index is much more influential than this weekly report.
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... Lock 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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