Rate Lock Advisory 05/13/2008 2:46pm CST

Mortgage and Lending with WR Starkey Mortgage, LLP.

Tuesday's bond market has opened in negative territory following the release of this morning's only economic data. The stock markets are showing losses with the Dow down 80 points and the Nasdaq down 13 points. The bond market is currently down 13/32, which will likely push this morning's mortgage rates higher by approximately .250 - .375 of a discount point.

The Commerce Department gave us April's Retail Sales data this morning, showing a 0.2% decline in sales. That matched forecasts, however, is more volatile auto sales were excluded, sales rose 0.5%. That reading was well above forecasts of a 0.2% increase, meaning with exception to auto sales, consumers were more active than many had thought. This is bad news for bonds because consumer spending makes up two-thirds of the U.S. economy.

Tomorrow's only relevant report is April's Consumer Price Index (CPI). It measures inflationary pressures at the important consumer level of the economy. Its results will be watched closely and can lead to significant volatility in the bond market and mortgage pricing. Current forecasts are calling for increases of 0.3% and 0.2% respectively in the overall index and the core data readings. The core data is the more important of the two since it excludes more volatile food and energy prices.

There are three reports scheduled over the remaining two days of the week, but none of them are considered to be of high importance to the markets. We will see April's Industrial Production Thursday and April's Housing Starts along with May's preliminary reading to the University of Michigan's Index of Consumer Sentiment Friday morning.

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 da ys 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.

©Mortgage Commentary 2008

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