Massachusetts Mortgage Rate Commentary 12/29/2009

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Tuesday’s bond market has opened slightly in positive territory following mixed trading in stocks and no surprises in this week’s only significant economic news. The stock markets are relatively calm with the Dow up 6 points and the Nasdaq down 3 points. The bond market is currently up 2/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point.

The Conference Board posted their Consumer Confidence Index (CCI) for December late this morning, showing a reading of 52.9. This nearly matched forecasts and indicates that consumer sentiment about their own financial situations was close to where analysts had thought. That can be considered favorable for mortgage rates with the recent negative tone in the bond market. The lack of a higher than expected reading brings somewhat of a sigh of relief following the downward move in bonds over the past two weeks.

Today also brings us the first of two important Treasury auctions on this week’s calendar. 5-year Treasury Notes will be sold today while 7-year Notes will be auctioned tomorrow. Yesterday’s 2-year Note sale, that was less important to mortgage rates than today’s and tomorrow’s sales will be, did not get an overly strong interest from investors. That raises concern that the other two sales may also generate a lackluster demand. If that is the case, we may see further weakness in bonds before the year-end and possibly upward revisions to mortgage rates. If we happen to get good results in the sales, particularly tomorrow’s more important 7-year Note sale, bond prices should move higher and mortgage rates move lower. Results of each auction will be posted at 1:00 PM ET each day, so the potential for afternoon revisions to rates is fairly high today and tomorrow.

There is no relevant economic news scheduled for release tomorrow except for weekly unemployment figures. The Labor Department is expected to announce that 460,000 new claims for benefits were filed last week. This would be an increase from the previous week, but unless we see a large variance I don’t think this data will have much of an impact on mortgage rates.

The bond market will close at 2:00 PM ET Thursday and all of the U.S. financial markets will be closed Friday in observance of the New Year’s Day holiday. They will reopen for regular hours next Monday morning.

If I were considering financing/refinancing a home, I would.... Float 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...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/28/09

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Monday’s bond market has opened in negative territory following minor gains in stocks. The stock markets are starting the week in positive ground, but not by much. The Dow is currently up 12 points while the Nasdaq has gained 4 points. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point compared to Thursday’s morning rates.

There is no relevant news scheduled for release today, leaving the stock markets to heavily influence bond trading and mortgage rates. If the major stock indexes remain near current levels, I suspect that bond prices and mortgage rates will follow suit today.

This week brings us the release of only one piece of economic data that is considered important to mortgage rates in addition to two important Treasury auctions. It is another holiday-shortened week with the New Years Day holiday Friday, so the data may have a heavier impact on trading than usual if it varies from forecasts by much. The bond market will close early Thursday and remain closed Friday as it did last week. With that type of schedule, many traders will not be working the latter part of the week, so any unexpected news or data may lead to a larger than usual reaction in the markets.

The only important release comes late tomorrow morning when the Conference Board will post its Consumer Confidence Index (CCI) for December. This is a pretty important release because it measures consumer willingness to spend. If consumers are more confident in their personal financial situations, they are more apt to make large purchases. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market participants and can have a significant influence on mortgage rate direction. Current forecasts are calling for an increase in confidence from November’s reading of 49.5. Analysts are expecting tomorrow’s release to show a reading of 53.0. The lower the reading, the better the news for bonds and mortgage pricing.

This week also has Treasury auctions scheduled the first three days. The two that are most likely to influence mortgage rates are tomorrow’s 5-year and Wednesday’s 7-year Note sales. If those sales are met with a strong demand, particularly Wednesday’s auction, bond prices may rise during afternoon trading. This could lead to improvements to mortgage rates shortly after the results of the sales are posted at 1:00 PM ET each day. But a lackluster investor demand may create bond selling and upward revisions to mortgage rates.

The bond market will close at 2:00 PM ET Thursday and all of the U.S. financial markets will be closed Friday in observance of the New Year’s Day holiday. They will reopen for regular hours next Monday 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 days from now...


©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/23/09

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Wednesday’s bond market has opened in positive territory after this morning’s economic data gave us favorable results. The stock markets are mixed with the Dow down 11 points and the Nasdaq up 5 points. The bond market is currently up 11/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.

November’s Personal Income and Outlays report was the first of today’s three releases. It showed that personal income rose 0.4% last month while spending rose 0.5%. Both of these readings were below forecasts, indicating that consumer ability to spend and their actual spending was not as strong as thought. This is fairly good news for bond and mortgage rates. They still posted strong increases that point towards a strengthening economy, but since they fell short of expectations we can consider the readings positive for bonds.

The second report also gave us a bit of good news. The University of Michigan revised their Index of Consumer Sentiment for December, posting a 72.5 reading that was lower than the previous estimate of 73.4. Current forecasts were calling for a reading of 73.8. This index measures consumer confidence, which is relevant to the markets because falling confidence usually means consumers are less apt to make large purchases in the near future. Slowing consumer spending indicates slower economic growth and makes bonds more attractive to investors.

The last report of the day also gave us results that were positive for bonds and mortgage rates, but since this was the week’s least important report its impact on rates has been minimal. November’s New Home Sales report revealed an 11.3% decline in sales of newly constructed homes. This was a huge difference from forecasts and hints that part of the housing sector is not stable yet.

Tomorrow’s only important data is November’s Durable Goods Orders that will be posted early morning. This data gives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years. Analysts are expecting the report to show a 0.5% increase in new orders. A decline in orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should drive mortgage rates lower. However, a larger than expected rise in orders could lead to mortgage rates moving higher early tomorrow.

The stock and bond markets will close early tomorrow ahead of the Christmas Day holiday and will remain closed Friday. They will reopen Monday morning for regular trading hours. I strongly suspect that trading will be thin tomorrow as many firms keep only a skeleton staff on Christmas Eve. This will likely be the same for many mortgage companies also, so it is highly unlikely to see any afternoon revisions to mortgage rates tomorrow.

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...


©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/21/2009

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Monday’s bond market has opened down sharply following early stock gains that has shifted funds away from the bond market. The stock markets are rallying with the Dow up 120 points and the Nasdaq up 24 points. The bond market is currently down 27/32, which will likely push this morning’s mortgage rates higher by approximately .750 of a discount point compared to Friday’s morning rates. Most of this increase comes this morning, but some of it came from weakness late Friday.

There is no relevant economic news scheduled for release today. As expected, the stock markets are driving bond trading and this morning’s mortgage pricing. The early interest in stocks has caused bond selling and moving funds into stocks where better returns are possible. The result is higher mortgage rates this morning.

This holiday-shortened trading week brings us the release of six monthly or quarterly economic reports. Only a couple of the reports being released are considered to be of high importance to the markets. With the Christmas holiday falling during the week we can expect very thin trading, meaning that we may see a larger reaction than normal to some news because there will be fewer traders working and less transactions being made. This will become more evident as the week progresses.

Tomorrow has two reports scheduled for release. The first is the final revision to the 3rd Quarter GDP. I don’t think this data will have an impact on mortgage rates unless it varies greatly from its expected reading. Last month’s first revision showed that the economy expanded at a 2.8% annual pace during the quarter and this month’s revision is expected to show the same. A significant upward revision would be considered bad news for bonds, but since this data is quite aged at this point I don’t think it will have much of an impact on mortgage rates tomorrow.

The second report of the day is November’s Existing Home Sales report. This release will come from the National Association of Realtors while Wednesday’s New Home Sales data is a Commerce Department report. Both give us a measurement of housing sector strength and mortgage credit demand, however, neither are considered to be of high importance. And both of the reports are expected to show a small increase in sales. Weaker than expected readings would be considered positive for bonds and mortgage rates because they hint at a weakening housing market, but unless the actual reading varies greatly from forecasts the results will probably have little or no impact on mortgage rates.

Overall, I am expecting to see some movement in the markets and mortgage rates this week. The bond market will close early Thursday and will be closed all day Friday in observance of the Christmas Day holiday. This means that firms that trade in bonds will likely be keeping only a skeleton staff the latter part of the week and raises the possibility of a stronger reaction to surprises in the economic data than we normally would see. Accordingly, proceed cautiously this week if still floating an interest rate and closing in the immediate future.

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...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/18/2009

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Friday’s bond market has opened down slightly with no relevant economic news scheduled for release today. The stock markets are showing relatively minor gains with the Dow up 8 points and the Nasdaq up 16 points. The bond market is currently down 4/32, but I am still expecting to see a small improvement in this morning’s mortgage rates due to strength late yesterday.

We likely will see plenty of movement in stocks today as a result of option expirations. Therefore, we cannot rely on stocks to give direction to bonds since the movement in the major stock indexes will be due more to the expirations than direct concerns or optimism about the economy. In other words, it will likely be a directionless day for unless something unexpected occurs. This will likely prevent seeing changes to mortgage rates this afternoon.

Next week brings us the release of a couple of important economic reports for the markets to digest. Included in next week’s releases are a couple of housing sector reports, data on personal income and spending along with a high profile manufacturing report. There is no relevant data scheduled for release Monday, so look for the stock markets to influence bond trading and mortgage pricing.

The next two weeks are holiday’s shortened trading weeks due to the Christmas and New Year’s holidays. As we get closer to those particular days, the market tends to thin as traders head home early for the holiday weekends. This sometimes leads to larger than normal reactions to some of the key reports or any significant news releases. But look for more details on next week’s events in Sunday’s weekly preview.



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...


©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/17

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Thursday’s bond market has opened in positive territory following a weak open in stocks. The stock markets are reacting to overseas losses and concerns about the economy after yesterday’s FOMC comments. The Dow is currently down 98 points while the Nasdaq has lost 23 points. The bond market is currently up 17/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount compared to yesterday’s morning rates.

The Labor Department gave us last week’s unemployment figures early this morning. They announced that 480,000 new claims for unemployment benefits were filed last week. This was good news for bonds because it was a higher number of claims than was expected. However, this data usually has little impact on mortgage rates because it tracks only a week’s worth of new claims.

Late this morning, the Conference Board posted their Leading Economic Indicators (LEI) for November. It showed a 0.9% increase, meaning that they think economic activity will be stronger over the next several months than many analysts had thought. This can be considered negative news for bonds, but since this is only a moderately important report, its impact on bond trading and mortgage rates has been minimal.

There is no relevant economic data scheduled for release tomorrow. We likely will see plenty of movement in the stock markets tomorrow as a result of option expirations. Therefore, we cannot rely on stocks to give direction to bonds since the movement in the major stock indexes will be due more to the expirations than direct concerns or optimism about the economy. In other words, it will likely be a directionless day for bonds tomorrow unless something unexpected occurs.



If I were considering financing/refinancing a home, I would.... Float 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...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com

Massachusetts Mortgage Rate Commentary 12/16/2009

Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!

Wednesday’s bond market has opened in positive territory after this morning’s inflation data did not cause concern like yesterday’s PPI release did. The stock markets are also showing gains with the Dow up 40 points and the Nasdaq up 15 points. The bond market is currently up 10/32, which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point.

This morning’s major news came from the Labor Department who reported that November’s Consumer Price Index (CPI) rose 0.4% and that the more important core data reading was unchanged from October’s level. The overall reading matched forecasts but the core data fell short of the 0.2% that was expected. This means that inflation at the consumer level of the economy was not nearly as strong as feared after yesterday’s Producer Price Index was posted. This is good news for the bond market and mortgage rates.

Today’s second release was November's Housing Starts that gave us an indication of housing sector strength. It matched forecasts of an 8.9% rise in construction starts of new homes, but this data is the least important this week’s reports. Its impact on this morning’s bond trading and mortgage rates has been minimal.

Later today, the two-day FOMC meeting with adjourn. There is not much debate about what the Fed will do at this meeting with little chance of them raising key short-term interest rates. Therefore, the post meeting statement will likely be the sole source of a market reaction. This statement has the potential to have a significant influence on the markets and mortgage rates as investors look for any indication of what and when the Fed may do next. Generally speaking, the bond market would like to hear something that indicates the Fed will not be raising rates anytime soon.

Look for an update to this report shortly after the markets have had an opportunity to react to the meeting’s results.

Tomorrow morning does bring us the release of a moderately important when November’s Leading Economic Indicators (LEI). This 10:00 AM release attempts to measure or predict economic activity over the next three to six months. It is expected to show a sizable increase in activity, meaning that it predicts any expanding economy over the next several months. This probably will not have much of an impact on bond prices or affect mortgage rates unless it exceeds current forecasts of a 0.7% increase from October’s reading. The lower the reading, the better the news for bonds. If it shows a smaller increase, the bond market may move slightly higher, improving mortgage rates slightly.

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...

©Mortgage Commentary 2009

Massachusetts mortgage applicants: Please note that this information reflects just one opinion on the current market and should be used for informational purposes only. Today’s mortgage market is very volatile and can change very quickly. www.JeffDrew.StarMortgage.com