Daily Rate Lock Advisory

Monday's bond market has opened in negative territory as investors prepare for this week's sales and speeches by President Obama and Fed Chairman Bernanke. The stock markets are showing losses with the Dow down approximately 15 points and the Nasdaq down 3 points. The bond market is currently down 10/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

There are only three pieces of economic data scheduled to be posted this week along with a couple of Treasury auctions and relevant speeches from highly important speakers. Only one of the three reports are considered to be of high importance while one is moderately important. The third is not considered to be of much importance unless it varies greatly from forecasts.

None of the economic reports were posted today. However, President Obama will address the nation on national television this evening. He will likely speak about his economic r ecovery plan amongst other important topics. What he says may heavily influence trading tomorrow morning. It is very difficult to predict whether the markets are likely to react favorably to his words or negatively. But I am expecting to see volatility tomorrow morning.

Fed Chairman Bernanke will be speaking before the House Financial Services Committee tomorrow at 1:00 PM ET. He is expected to testify and update the panel on the Fed's liquidity injections and future plans. His words could create movement in the markets and possibly mortgage pricing during afternoon trading.

There is no relevant data scheduled for release until Wednesday morning. This is when the week's least important data, December's Goods and Services Trade Balance, will be posted. This report measures the U.S. trade deficit and can affect the value of the U.S. dollar versus other currencies, but it usually does not cause enough movement in bond prices to affect mortgage rates.

Overall, it is difficult to peg a particular day as the most important of the week. Tomorrow will be quite interesting with the reaction to President Obama's words from tonight and Fed Bernanke's testimony on the Fed's attempts to stabilize the financial system. The single most important piece of economic news comes Thursday, so that day needs to be given much weight also. Throw in the fact that there is an early close Friday due to the President's Day holiday next Monday, and we have the makings of an interesting week ahead of us.

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 b e in the best interest of all/any other borrowers.


©Mortgage Commentary 2009