Daily Rate Lock Advisory

Rate Lock Advisory - Thursday Mar. 5th


Thursday's bond market has opened strong following early stock weakness. The major stock indexes are showing significant losses after yesterday's rally. The Dow is currently down 230 points while the Nasdaq is down 42 points. The bond market is currently up 34/32, but we will likely see an improvement in this morning's mortgage rates of only .125 - .250 of a discount point.

This morning's economic news gave us results that were not favorable to bonds and mortgage rates. The Productivity revision revealed a much lower level of worker output than was expected. Today's report showed a decline in output of 0.4% compared to the increase of 1.0% that was forecasted and the 3.2% gain that was estimated last month. It also showed a significant upward revision to the Unit Labor Costs portion of the report that raises wage inflation concerns. Even though this report is of medium importance to the markets, the revised readings are somewhat surprising.

The second report of the morning wasn't much better either. The Commerce Department reported that Factory Orders fell 1.9% in January. This was stronger than analysts' revised forecasts of a 3.5% decline, but today's reports also revised December's orders lower by 1.0%. That seemed to have offset the higher than expected reading, but this report is also considered to be of medium importance so its impact has been relatively minimal.

The Labor Department reported that 639,000 new claims for benefits were filed last week. This was lower than expected and a decline from the previous week's total.

Tomorrow morning brings us February's Employment report at 8:30 AM ET tomorrow. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in payrolls and little or no increase in earnings. Current forecasts are calling for 0.3% increase in the unemployment rate to 7.9% and approximately 650,000 jobs lost during the month.

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... 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 2009

* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.