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Mortgage Rate Lock advisory for New York or Florida Mortgages for the week of March 12, 2012

By
Mortgage and Lending with Bob Amato of Empire Home Mortgage Inc

If you are looking for a Mortgage Professional who will give you the type of service that you deserve, contact Bob Amato (NMLS # 8632) and Empire Home Mortgage Inc. (NMLS # 44882). We answer our phones seven days a week until 9PM. Put us to the test! Our toll free number is (866) 742-5227.

 Visit our website, www.empirehomemortgageinc.com . There you can get answers to all of your financing questions, view rates and search for foreclosed properties.

 If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.

 This week brings us the release of five relevant economic reports along with an FOMC meeting and two Treasury auctions for the markets to digest. A couple of the week's reports are considered highly important, as is of course the FOMC meeting. There is nothing of relevance to mortgage rates being released or taking place today, so all of the week's events are scheduled over four days.

 The first thing on the calendar will come from the Commerce Department early Tuesday morning when they post February's Retail Sales data. This data is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up over two thirds of the U.S. economy, data that is related usually has a big impact on the markets. This month's report is expected to show an increase in sales of approximately 1.0%. If it reveals a larger than expected increase, the bond market will likely fall and mortgage rates will move higher as it would indicate a stronger level of economic growth than many had thought. If it reveals a much smaller than expected increase, I expect to see bond prices rise and mortgage rates improve Tuesday morning.

 Also Tuesday is the Federal Open Market Committee (FOMC) meeting. This is a single day meeting that will adjourn at 2:15 PM ET. It is widely believed that the Fed will make no change to key short term interest rates at this meeting, but the post meeting statement will be watched closely for any change in their feelings about the economy or any other moves they may make, such as QE3. Generally speaking, the bond market wants to hear that inflation is not an immediate concern and that key rates will be kept at current levels for a long time. An announcement of another round of Quantitative Easing to help keep long term interest rates low could fuel a bond rally.

 There are two Treasury auctions this week that could potentially affect mortgage rates. The first is the 10 year Treasury Note auction Tuesday and the 30 year bond sale will be held Wednesday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading as it would indicate that investors still have an appetite for longer term securities. However, weak demand in the sale could lead to selling and an increase in mortgage rates.

 Wednesday also has a speaking engagement by Fed Chairman Bernanke. He will be speaking to the Independent Community Bankers Association in Nashville at 9:00 AM ET. I don’t believe he will say anything that will be a market mover, especially the morning after the FOMC meeting. However, market participants always watch his words closely so any surprises will have an impact on the markets and possibly mortgage pricing.

 The Labor Department will post February's Producer Price Index (PPI) early Thursday morning. This important index measures inflationary pressures at the producer level of the economy. There are two portions of the index the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy (including gasoline) prices. If the index shows a large increase, inflation concerns will rise, making long term investments such as mortgage related bonds less attractive to investors. This would lead to higher mortgage rates Thursday morning. Current forecasts are calling for a 0.5% increase in the overall reading and a 0.2% increase in the core data.

 Friday has the remaining three economic reports scheduled. February's Consumer Price Index (CPI) will be released early Friday morning, which measures inflationary pressures at the very important consumer level of the economy. Its results can definitely have a huge impact on the financial markets, especially long term securities such as mortgage related bonds. It is expected to show a 0.4% increase in the overall index and a 0.2% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall Friday.

 Friday’s next report will come mid morning when February's Industrial Production report is posted. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.5% increase from January's level. A decline would be considered extremely favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness and a broader economic recovery is more difficult if manufacturing activity is slipping.

 The week’s final piece of data is the University of Michigan's Index of Consumer Sentiment for March just before 10:00 AM ET Friday. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates, assuming the CPI matches forecasts. Bad news for bonds and mortgage rates would be rising confidence. It is expected to show a reading of 76.0, which would be an increase from February's final reading 75.3.

 Overall, look for Tuesday or Friday to be the most important day of the week due to the importance of those day’s reports and the FOMC meeting. Tomorrow will likely be the least active day for mortgage rates, but we could see plenty of movement in the markets and mortgage pricing several days this week. Therefore, please be attentive to the markets and maintain contact with your mortgage professional 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... Float 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 story providers.

Comments (2)

Kim Carlson 480-993-9384
www.NowSellingAZHomes.com - Mesa, AZ
Valley of the Sun Realtor, Seller Specialist

Good morning Bob, Wow your customer service is over the top! If you were in Arizona we would have to meet because I would love someone like you on my team!

Mar 12, 2012 12:08 AM
Robert Amato
Bob Amato of Empire Home Mortgage Inc - East Meadow, NY

Thanks for the kind comment Kim. You can follow my daily market comments or visit my website daily at empirehomemortgageinc.com . The commentaries are posted there daily.

 Thanks again.

Mar 12, 2012 12:37 AM