Massachusetts Mortgage Rate Commentary 10/27/09

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

Tuesday’s bond market has opened in positive territory following the release of a much weaker than expected consumer confidence reading. The stock markets are mixed with the Dow up 57 points and the Nasdaq down 6 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 - of a discount point.

The Conference Board said that their Consumer Confidence Index (CCI) for October fell to 47.7. This was much weaker than the 53.5 that was expected and indicates that consumers are less optimistic about their own financial situations than many had thought. That is favorable news for bonds and mortgage rates because it means that consumers are less likely to make large purchases in the near future, therefore, limiting economic growth.

The Commerce Department will post Durable Goods Orders for September early tomorrow morning. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. Analysts are currently calling for an increase in new orders of approximately 1.0%. If we see a larger than expected increase in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast.

Also tomorrow is the release of September’s New Home Sales. This data covers the remaining 15% of home sales that last week’s Existing Home Sales report tracked and is this week’s least important data. It is expected to show an increase in sales, but regardless of its results I am not expecting it to have a significant impact on mortgage rates.

Tomorrow also brings us the first of the two relevant Treasury auctions. 5-year Notes will be sold tomorrow, which will help us prepare for Thursday’s 7-year Note sale. If the sales go well, we may see afternoon strength in bonds that lead to downward revisions to mortgage rates. But lackluster interest in them will probably cause bonds to fall and mortgage rates to move higher. Results of the sales are posted at 1:00 PM ET each day.

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... Lock 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

* Please note that this information reflects just one opinion on the current market. If you are considering a purchase or refinance and have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that mortgage rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. Contact me for details. Jeff@StarMortgage.com

Massachusetts Mortgage Rate Commentary 10/26/2009

Monday’s bond market has opened well in negative ground following early stock gains. The stock markets are showing early strength with the Dow up 97 points and the Nasdaq up 27 points. This pushes the Dow above the important 10,000 benchmark level yet again, but its ability to hold that level has come up short during recent trading. It appears that until that level can hold, many analysts will remain skeptical of the recent stock rally. However, as stocks rise this morning, bonds are falling. The bond market is currently down 24/32, which will likely push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point over Friday’s morning rates.

There is no relevant economic data scheduled for release today. The rest of the week brings us the release of seven relevant economic reports and two important Treasury auctions for the bond market to digest. Contributing to this morning’s bond losses is the fact that there is $123 billion of Treasury debt being sold this week. That new supply of debt makes existing bonds and notes less attractive to investors. It is also common to see selling in bonds ahead of these auctions so market participants can prepare for the sales.

The first report of the week is one of the more important ones. October’s Consumer Confidence Index (CCI) will be posted late tomorrow morning. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show a small increase in confidence from last month’s 53.1 reading, indicating that consumers are a little more likely to make large purchases in the near future than last month. As long as the reading doesn’t exceed the forecasted 53.5, we will likely see the bond market react favorably to this report. This data is watched closely because consumer spending makes up two-thirds of the U.S. economy.

Overall, it will likely be an active week for the markets and mortgage rates. I believe that the single most important day will probably end up being Thursday with the extremely important GDP release in the morning and the Treasury auction results during afternoon hours. However, tomorrow, Wednesday and Friday should also be active. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week, especially if still floating an interest rate.



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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

Massachusetts Mortgage Rate Commentary week of 10/25

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

This week brings us the release of seven relevant economic reports and two important Treasury auctions for the bond market to digest. There is relevant data or events scheduled every day except tomorrow, so there is a pretty good chance of seeing noticeable movement in mortgage rates several days this week.

The first report of the week is one of the more important ones. October’s Consumer Confidence Index (CCI) will be posted late Tuesday morning. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show a small increase in confidence from last month’s 53.1 reading, indicating that consumers are a little more likely to make large purchases in the near future than last month. As long as the reading doesn’t exceed the forecasted 53.5, we will likely see the bond market react favorably to this report. This data is watched closely because consumer spending makes up two-thirds of the U.S. economy.

Wednesday morning the Commerce Department will post Durable Goods Orders for September. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. Analysts are currently calling for an increase in new orders of approximately 1.0%. If we see a larger than expected increase in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast.

Also Wednesday is the release of September’s New Home Sales. This data covers the remaining 15% of home sales that last week’s Existing Home Sales report tracked and is this week’s least important data. It is expected to show an increase in sales, but regardless of its results I am not expecting it to have a significant impact on mortgage rates Wednesday.

The next relevant data is the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) early Thursday morning. The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. and therefore is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Thursday’s release is the first and usually has the biggest impact on the markets. Current forecasts call for an increase of approximately 3.2% in the GDP. If this report does show a much smaller increase, I am expecting to see the bond market rally and mortgage rates to fall. However, a larger than expected rise could lead to bond selling and a sizable increase in mortgage pricing.

There are three reports scheduled for release Friday. The first is the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.5%. A smaller than expected increase would be good news for bonds and mortgage rates.

September’s Personal Income and Outlays report will also be posted early Friday. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see no change in income and decline in outlays of 0.5%.

The week’s last report comes at 10:00 AM ET Friday when the University of Michigan updates their Index of Consumer Sentiment for this month. Current forecasts show this index rising slightly this month’s preliminary reading of 69.4. This index is moderately important because it helps us measure consumer confidence, which is believed to indicate consumers’ willingness to spend. Since consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be relevant.

This week also has Treasury auctions scheduled each day except Friday. However, the two that are most likely to influence mortgage rates are Wednesday’s 5-year and Thursday’s 7-year Note sales. If those sales are met with a strong demand, particularly Thursday’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.

Overall, it will likely be an active week for the markets and mortgage rates. I believe that the single most important day will probably end up being Thursday with the extremely important GDP release in the morning and the Treasury auction results during afternoon hours. Tomorrow will likely be the calmest day of the week, but Tuesday, Wednesday and Friday should also be active. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week, especially if still floating an interest rate.

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... Lock 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

* Please note that this information reflects just one opinion on the current market. If you are considering a purchase or refinance and have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that mortgage rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. Contact me for details. Jeff@StarMortgage.com

Massachusetts Mortgage Rate Commentary 10/23

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

Friday’s bond market has opened in negative territory again despite stock weakness during early trading. The stock markets are still unable to hold recent gains with the Dow down 90 points and again falling below the 10,000 benchmark. The Nasdaq is currently down 4 points. The bond market is down 13/32, which will likely push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point.

Today’s only relevant economic news came from the National Association of Realtors who reported that home resales rose to their highest level in over two years during September. This is bad news for bonds because a strengthening housing market makes a broader economic recovery much more likely. However, this data is not one of the more important reports we see each month, so its impact on today’s rates has been fairly minimal.

Next week is much more active in terms of important economic reports than this week was. There are reports that are considered to be highly important scheduled for release multiple days. They include a key measure of consumer confidence, personal income and spending data and the preliminary estimate of the 3rd Quarter Gross Domestic Product (GDP). We also have a couple of Treasury auctions to look out for.

None of the important data is scheduled for release Monday, so I am expecting stocks to heavily influence trading and any changes to mortgage pricing. Look for details on next week’s reports and 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... Lock if my closing was taking place between 8 and 20 days... Lock 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

* Please note that this information reflects just one opinion on the current market. If you are considering a purchase or refinance and have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that mortgage rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. Contact me for details. Jeff@StarMortgage.com

Massachusetts Mortgage Rate Commentary 10/22

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

Thursday’s bond market has opened in negative territory again as traders still wait for direction on the stock markets. Stocks are mixed with the Dow up 44 points and the Nasdaq down 8 points. The bond market is currently down 6/32, but we will likely see an improvement in mortgage rates of approximately .250 of a discount point due to strength late yesterday.

Neither of today’s economic releases were considered to be highly important. The Labor Department gave us favorable news with an announcement that 531,000 new claims for unemployment benefits were filed last week. This was higher than expected, indicating that the employment sector may be weakening. However, this data usually has little influence on mortgage rates unless it varies greatly from forecasts because it tracks a week’s worth of new claims.

Late this morning the Conference Board, who is a New York-based business research group, said that their Leading Economic Indicators (LEI) rose 1.0% last month. This was a larger jump than what analysts had expected, meaning that economic activity may increase over the next three to six months at a faster pace than many had thought. This is negative news for bonds and mortgage rates because rapid economic growth raises fears of inflation that makes long-term securities such as mortgage-related bonds less attractive to investors.

Yesterday afternoon’s release of the Fed Beige Book didn’t give us any significant surprises. It pointed towards a stabilizing economy in most regions and slight growth in some, which was the general consensus anyhow. This made it a non-factor on mortgage rates late yesterday.

September’s Existing Home Sales will be posted late tomorrow morning. This National Association of Realtors report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales. It likely will have little influence on the bond market or mortgage rates unless its results vary greatly from analysts’ forecasts. It is expected to show an increase in sales from August to September, meaning that the housing sector likely strengthened.

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

* Please note that this information reflects just one opinion on the current market. If you are considering a purchase or refinance and have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that mortgage rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. Contact me for details. Jeff@StarMortgage.com

Massachusetts Mortgage Rate Commentary 10/21/2009

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

Wednesday’s bond market has opened well in negative territory following despite no relevant economic news being released. The stock markets are showing gains with the Dow up 48 points and the Nasdaq up 16 points. The bond market is currently down 16/32, which will likely push this morning’s mortgage rates higher by approximately .375 of a discount point.

There was no relevant economic data posted this morning, but this afternoon brings us the release of the Fed Beige Book. This 2:00 PM release details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during their FOMC meetings when determining monetary policy. If it reveals stronger signs of inflation or economic growth from the last release, we could see mortgage rates revise higher this afternoon.

The Labor Department will give us last week’s unemployment numbers early tomorrow morning. Analysts are expecting it to show that 517,000 new claims for benefits were filed last week. A larger number would be favorable for bonds, but this data is not important enough to heavily influence mortgage rates.

The next monthly report is September’s Leading Economic Indicators (LEI) late tomorrow morning. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.9% from August’s reading. This would indicate that economic activity is likely to increase fairly rapidly. That would be bad news for the bond market and mortgage rates, but this report is considered to be only moderately important.



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

* Please note that this information reflects just one opinion on the current market. If you are considering a purchase or refinance and have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that mortgage rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. Contact me for details. Jeff@StarMortgage.com

Massachusetts Mortgage Rate Commentary 10/20/2009

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

Tuesday’s bond market has opened in positive territory following weaker than expected economic reports and early stock losses. The stock markets are negative ground with the Dow down 52 points and the Nasdaq down 14 points. The bond market is currently up 16/32, which will likely improve this morning’s mortgage rates by approximately .125 - .250 of a discount point.

The Labor Department reported this morning that September’s Producer Price Index (PPI) fell 0.6% while the core data fell 0.1%. Both of these readings were weaker than expected, indicating that inflationary pressures at the producer level of the economy remained subdued last month. This is very good news for bonds because inflation erodes the value of a bond’s future fixed interest payments. Therefore, a low inflation environment makes bonds more attractive to investors and leads to lower mortgage rates.

September’s Housing Starts was also released this morning. It also showed weaker than expected results, meaning that the number of construction starts of homes fell short of expectations. This is good news for bonds because a weak housing sector makes a broader economic recovery less likely. However, this data was not nearly important to the markets as the PPI readings were.

The only data scheduled for release tomorrow comes during afternoon trading when the Federal Reserve will release its Beige Book at 2:00 PM ET. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during their FOMC meetings when determining monetary policy. If it reveals stronger signs of inflation or economic growth from the last release, we could see mortgage rates revise higher shortly after its release.



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

* Please note that this information reflects just one opinion on the current market. If you are considering a purchase or refinance and have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that mortgage rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. Contact me for details. Jeff@StarMortgage.com