Mortgage Rate Advice

Rate Lock Advisory - Thursday Apr. 9th





Thursday's bond market has opened in negative territory following early stock strength. The stock markets are rallying this morning with the Dow up 192 points and the Nasdaq up 48 points. The bond market is currently down 16/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

Today's only monthly economic data was February's Goods and Service Trade Balance. It showed that the U.S. trade deficit fell to $26.0 billion in February. This was much lower than expected and was its lowest level since 1999. Unfortunately, this data isn't considered to be highly important to mortgage rates directly. In fact, the news has had little impact on trading despite the wide variance between forecasts and the actual reading. However, news like this can strengthen the U.S. dollar versus other currencies, making U.S. securities more appealing to international investors. This is because a stronger dollar makes the securities more valuable when sold and their proceeds are converted to the investors' own currency.

The Labor Department reported that 654,000 new claims for unemployment benefits were filed last week. This was close to forecasts and also has had little influence on this morning's bond trading or mortgage rates.

Yesterday's FOMC minutes basically gave the bond market good news but consumers and businesses bad news. The minutes showed that during the last meeting the Fed revised their outlook for the economy and recovery to a worse position. They extended out their estimate of when the Gross Domestic Product (GDP), which is the most important benchmark of economic activity, will stabilize. They also renewed concerns about deflation, meaning that inflation is not an immediate concern. Overall, the minutes didn't reveal any major surprises, but did support the theory that the economy is worse than many, including the Fed, had previously thought. Generally speaking, weak economic conditions usually create a favorable environment for bonds, leading to lower mortgage rates.

Today's 10-year Treasury auction's results will be posted at 1:00 PM ET. If there was a strong demand from investors, we may see bond prices improve and mortgage rates revise lower during the last hour of trading. The bond market will close today at 2:00 PM ET today ahead of tomorrow's Good Friday holiday. The markets will reopen Monday morning for regular trading hours. Most lenders will be closed tomorrow also, but if any are working they will likely keep today's afternoon rates until Monday morning.

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.


©Mortgage Commentary 2009

Disclaimer: If you have a Massachusetts Mortgage rate and monthly payment you are comfortable with you may choose to lock your rate. Most lenders have a re-negotiation policy. Call me to review your scenario. Refinance to a low rate fixed rate mortgage in Massachusetts.