Massachusetts Mortgage Rate Commentary 12/9/2009

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

Wednesday’s bond market has opened relatively flat following an uneventful opening in stocks. The stock markets are mixed with the Dow up a couple of points and the Nasdaq down nearly the same. The bond market is practically unchanged from yesterday’s closing level, so I am expecting little change in this morning’s mortgage rates.

There is no relevant economic news being posted today, but we do have the first of this week’s two important Treasury auctions. The 10-year Note sale is being held today while 30-year Bonds will be sold tomorrow. Today’s sale is more important to mortgage rates than tomorrow’s is. If there was a strong demand from investors, we should see bond prices move higher after results are posted at 1:00 PM ET. This could lead to downward revisions to mortgage rates this afternoon. However, if the sale was met with a lackluster interest, there is a pretty decent possibility of seeing higher mortgage pricing later today.

October’s Goods and Services Trade Balance report will be posted early tomorrow morning. This report gives us the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect it to affect mortgage pricing.

The Labor Department will post last week’s unemployment figures. They are expected to announce that 465,000 new claims for benefits were filed last week, up from the previous week. That would be considered favorable news for the bond market and mortgage rates, but the truth is that this data is not considered to be highly important because it tracks only a week’s worth of new claims. It usually takes a wide variance between the announced total of new claims and forecasts for them to have much of an impact on mortgage rates.

We do get some important economic data Friday morning when November’s Retail Sales report is released. This is one of the more important reports released each month since it tracks consumer spending. Consumer spending makes up two-thirds of the U.S. economy, so any related data is watched closely. It is expected to show a 0.7% increase in sales at retail level establishments, meaning consumer spending was stronger in November than in October. Since the market is expecting an increase, it will likely take a larger than expected jump in sales for the bond market to react negatively and mortgage rates to rise. A smaller than expected increase should lead to lower mortgage rates Friday.

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 12/8/2009

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

Tuesday’s bond market has opened in positive territory again following early weakness in stocks. The stock markets are showing sizable losses with the Dow down 85 points and the Nasdaq down 6 points. The bond market is currently up 11/32, which should improve mortgage rates by approximately .250 - .375 of a discount point over yesterday’s morning rates.

There is no relevant economic news scheduled for release today or tomorrow. Therefore, I am expecting the stock markets to likely be the biggest influence on bond trading and mortgage rates today. If the major stock indexes move lower we may see bond prices move higher and mortgage rates improve this afternoon.

Tomorrow does bring us the first of this week’s two important Treasury auctions. The 10-year Note sale will be held Wednesday while 30-year Bonds will be sold Thursday. Wednesday’s auction is the more important of the two events and will likely influence mortgage rates more. Results of each sale will be posted at 1:00 PM ET. If they were met with a strong demand from investors, particularly international buyers, we should see afternoon strength in bonds and improvements to mortgage pricing those days.

There is no relevant economic news scheduled for release today, tomorrow or Wednesday. October’s Goods and Services Trade Balance report will be posted early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect it to affect mortgage pricing.



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 12/7/09

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

Monday’s bond market has opened in positive territory, recovering part of Friday’s sell-off. The stock markets are showing modest gains with the Dow up 20 points and the Nasdaq up 3 points. The bond market is currently up 8/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point from Friday’s morning rates.

This week is fairly light in terms of the number of economic releases scheduled for release. There are only three on the agenda but one of them is considered to be very important and can heavily influence the markets and mortgage pricing. In addition, there are two Treasury auctions the middle part of the week that may hurt or help boost bond prices, depending on how strong of a demand there is for the sales. Since all of the relevant data is scheduled for release Thursday and Friday, the most movement in rates will likely be the middle or latter part of the week.

Fed Chairman Bernanke will be speaking to the Economic Club of Washington D.C. at noon today. This is not considered to be an important speech and likely will not influence mortgage rates. However, whenever he speaks publicly, the possibility does exist that his words could rattle or rally the markets. I am not concerned about this one and don’t feel there should be much attention placed on it.

There is no relevant economic news scheduled for release today, tomorrow or Wednesday. October’s Goods and Services Trade Balance report will be posted early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week’s least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don’t expect it to affect mortgage pricing.

Overall, expect to see a pretty volatile second half of the week with the biggest moves in mortgage pricing likely to come Wednesday or Friday. Friday’s Retail Sales report can cause a great deal of movement in rates, but Wednesday’s Treasury auction may also help determine if rates will close the week higher or lower than tomorrow’s opening levels. It will also be interesting to see if bonds extend Friday’s selling into tomorrow’s trading or if they recover some of those losses. This looks to be one of those weeks that maintaining contact with your mortgage professional would be wise.

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 12-4-2009

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

Friday’s bond market has opened down sharply due to the results of this morning’s Employment report. The stock markets are rallying around the news, pushing the Dow higher by 130 points while the Nasdaq has gained 37 points. The bond market is currently down 34/32, which should translate into an increase in this morning’s mortgage rates of approximately .625 of a discount point. This equates to approximately .125 of a percent in rate.

The Labor Department gave us today’s news that was so bad for bonds. They reported that the U.S. unemployment rate fell to 10.0% last month when it was expected to remain at 10.2%. They also announced that only 11,000 jobs were lost last month, falling well short of the 125,000 loss that was forecasted. In addition, today’s report also revised October’s job loss lower by 79,000 jobs. These were big numbers for the markets and indicate that the employment sector was not nearly as weak as many had thought. That is bad news for the bond market and mortgage rates because a strengthening labor market means a broader economic recovery is more likely.

In a small bit of good news, the report showed that average hourly earnings rose only 0.1% last month when it was expected to show a 0.2% increase. This means that earnings paid to workers did not rise as much as thought, which is good news for bonds because it eases wage-inflation concerns. However, this is the least important of the three major readings in the data and had little impact on this morning’s bond selling.

Also posted this morning was October’s Factory Orders report. It also revealed a stronger than expected reading for October and revised September’s orders much higher than previously announced. The 0.6% increase was well above forecasts for October, indicating that the manufacturing sector may be gaining steam. While this data can be considered negative for bonds and mortgage pricing, it is not nearly important as the monthly Employment report and has had little influence on this morning’s mortgage rates.

Next week is fairly light in terms of the number of economic reports scheduled for release, especially the first part of the week. There is no relevant economic data scheduled to be posted Monday and the latter part of the week brings us the only important economic news. But we do have a couple of key Treasury auctions to watch the middle days. Look for more details on next week’s data and events in Sunday evening’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... 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 12/3/09

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

Thursday’s bond market has opened in negative territory following the release of unfavorable economic news. The stock markets are mixed again with the Dow down 25 points and the Nasdaq up 3 points. The bond market is currently down 13/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point over yesterday’s morning rates.

The 3rd Quarter Productivity revision gave us a lower level of productivity than previously thought and fell short of forecasts. The 8.1% annual rate of worker productivity growth can be considered negative new for bonds because the preliminary estimate stood at 9.5% and forecasts for today’s revision were 8.5%. That is still a healthy rate of productivity, but the fact that it fell short of expectations means it is bad news for bonds.

The Labor Department also gave us news that was not so good for bonds and mortgage rates. They reported that 457,000 new claims for unemployment benefits were filed last week. This was a lower total than the 480,000 that was expected and their lowest total since September of last year, meaning the employment situation may be stronger than thought. However, this data usually does not carry too much weight because it tracks only a single week’s worth of new claims. Tomorrow’s monthly report is a different story though.

Also worth noting is today’s Senate confirmation hearing for Fed Chairman Bernanke. I don’t think anything said during today’s hearing will significantly affect the markets or mortgage rate. He has stated that the economy is coming out of the recession but that there is still more work to be done. Despite some early barbs in the hearing, there is little doubt that he will be confirmed for another term four-year term.

We will here again from the Labor Department tomorrow morning when they post November’s Employment report. This is arguably the most important monthly report we see. It is comprised of many statistics and readings, but the most important ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for no change in the unemployment rate of 10.2%, payrolls down approximately 125,000 and an increase of 0.2% in average earnings. An ideal scenario for mortgage shoppers would be a higher unemployment rate than 10.2%, a larger decline in jobs and no change in the earnings reading.

Also scheduled for release tomorrow is the October’s Factory Orders report. This data is similar to last week’s Durable Goods Orders release by giving us a measurement of manufacturing sector strength, except this one includes orders for both durable and non-durable goods. This data usually isn’t a major influence on bond trading, but there is little chance of it impacting mortgage rates this tomorrow because the Employment report is an extremely important report. Analysts are expecting to see little change in new orders from September to October.

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 12/2

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

Wednesday’s bond market has opened flat with no relevant economic news scheduled for release this morning. The stock markets aren’t influencing bond trading either with the major indexes mixed. The Dow is currently down 10 points and the Nasdaq up 15 points. The bond market is nearly unchanged from yesterday’s close, but we will still likely see an increase in this morning’s mortgage rates of approximately .250 of a discount point due to weakness late yesterday.

Today’s only relevant report comes during afternoon trading. The Fed Beige Book will be released at 2:00 PM ET today. This report, which is simply named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises.

Tomorrow morning brings us the release of the revised 3rd Quarter Productivity report. This index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn’t necessarily bad for the bond market. It is the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 8.6%, down from the previous estimate of 9.5%.

We also get weekly unemployment figures from the Labor Department tomorrow morning. They are expected to say that 480,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week, but unless the total varies greatly from this forecast I don’t believe it will have much of an impact on tomorrow’s mortgage rates.



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 12/1

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

Tuesday’s bond market has opened in negative territory despite weaker than expected economic results from a very important report. Stock market gains are likely the cause of this morning’s bond weakness. Stocks are rallying with the Dow up 133 points and the Nasdaq up 30 points. The bond market is currently down 11/32, which should push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point.

Today’s big news came from the Institute for Supply Management (ISM) who posted their manufacturing index for November. They announced a reading of 53.6 that fell short of the 54.9 that was expected, meaning manufacturer sentiment was weaker than thought. This is supposed to be good news for bonds and mortgage rates because a weakening manufacturing sector makes a broader economic recovery less likely and eases inflation concerns that hurt bond prices. Unfortunately for mortgage shoppers, today’s data is not influencing trading as much as it usually does.

The Fed Beige Book will be released at 2:00 PM ET tomorrow and is the day’s only relevant data. This report, which is simply named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises.

The next piece of data that we need to be concerned with comes Thursday morning with the release of the revised 3rd Quarter Productivity report. This index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn’t necessarily bad for the bond market. It is the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 8.6%, down from the previous estimate of 9.5%.

I still believe Friday is the day to watch out for. It brings us the almighty monthly Employment report. Its results can erase the entire week’s gains or losses in the hour of trading following its release. It appears that my concern about bonds meeting resistance at current levels was accurate. This will probably remain the case until we get a significant catalyst to break through these levels. Friday’s report certainly has the potential to do this, assuming that the data is favorable to bonds. Until then, it is prudent to remain cautious towards rates.

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