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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.
There were two pieces of data posted early this morning, but the big news was May’s Consumer Price Index (CPI). The Labor Department reported that the overall CPI reading fell 0.3% last month and that the core reading rose 0.2%. The overall reading was weaker than expected, but the more important core reading that excludes more volatile food and energy costs was a little higher than forecasted. This means that core prices at the consumer level of the economy rose a little more than many had thought, making the data slightly negative for the bond market and mortgage pricing.
Today’s second report also came from the Labor Department, who announced that 386,000 new claims for unemployment benefits were filed last week. This was higher than the revised total of 380,000 from the previous week and noticeably higher than the 375,000 that was expected. Since rising initial claims for unemployment benefits indicate a weakening employment sector, we can consider this data favorable for the bond market and mortgage pricing. Unfortunately, this report tracks only a single week’s worth of new claims, so it takes a large variance from forecasts for this data to influence mortgage rates.
Also today is the 30-year Treasury Bond sale. Yesterday’s 10-year Note auction went fairly well. The results of the sale were somewhat mixed, but the market seemed to respond well to it during afternoon trading. Results of today’s auction will be posted at 1:00 PM ET, so any reaction today will come during afternoon hours again. If there was a strong demand for the sale, we could see bond prices rise later today, possibly improving mortgage rates slightly.
Tomorrow also has two pieces of economic data that are relevant to mortgage rates. The first is May's Industrial Production data at 9:15 AM ET. It is considered to be moderately important to the markets. It measures output at U.S. factories, mines and utilities, giving us a fairly important measurement of manufacturing sector strength. If it reveals that production is rising, concerns of manufacturing strength may come into play in the bond market. A larger increase then the expected 0.1% would indicate that the manufacturing sector is stronger than thought and would likely help push mortgage rates slightly higher.
June's preliminary reading to the University of Michigan's Index of Consumer Sentiment will close the week’s events, but will be posted late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 77.0, which would be a decline from May’s 79.3. A smaller than expected reading would be considered good news for bonds because it would mean that surveyed consumers were less optimistic about their own financial situations than thought. That often means they are less likely to make large purchases in the near future, but since this report is only moderately important it likely will not influence mortgage rates considerably.
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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