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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.
Thursday’s bond market has opened in negative territory as the recent stock selling appears to have subsided. The Dow is currently up 51 points while the Nasdaq has slipped 3 points. The bond market is currently down 12/31, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.
The Labor Department announced early this morning that 367,000 new claims for unemployment benefits were filed last week. This was close to forecasts and a slight upward revision to the previous week’s number of new claims means there was little change from two weeks ago to last week. That was expected before revisions, meaning the data failed to give us any significant surprises. Therefore, it has had little impact on this morning’s bond trading or mortgage pricing.
March's Goods and Services Trade Balance report was also released early this morning, revealing a $51.8 billion trade deficit. This was a bit higher than analysts had forecast, but not enough for the news to influence the markets or this morning’s mortgage rates.
We also have today’s 30 year Bond auction to watch. Results will be posted at 1:00 PM ET, so any reaction will come during afternoon hours. Yesterday’s 10 year Note sale was mixed and somewhat confusing, but the market did not rally after its results were announced. This gives us little to look forward to in today’s sale. This doesn’t mean that I am concerned about it or its impact on mortgage rates. It simply indicates that we aren’t sure what to expect from it.
Tomorrow also has two pieces of economic data scheduled for release, but they both are more important to mortgage rates than either of this morning’s reports were. April's Producer Price Index (PPI) is the first at 8:30 AM ET. It helps us measure inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the producer level, we should see the bond market rally. The overall index is expected to show no change, while the core data that excludes more volatile food and energy prices has been forecast to rise 0.2%. A decline in the core data would be ideal for mortgage shoppers because inflation is the number one nemesis for long term securities such as mortgage related bonds.
The last report of the week is May's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend, which relates to consumer spending. If consumers are more confident of their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 76.0, which would be a small decline from last month's final reading. If it shows a large decline in consumer confidence, bond prices could rise and mortgage rates would move slightly lower because waning confidence means consumers are less apt to make a large purchase in the near future. That is assuming the PPI does not give us a significant surprise though. The PPI is much more important to the bond market than the sentiment index is, so look for it to be the biggest influence on tomorrow's mortgage pricing (besides sizable stock movement).
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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