Mortgage Market Update/Purchase and Refinance Mortgage info

[Tamalewagon]

We believe in them (scroll down a little)...

https://www.facebook.com/Wenhe-Mortgage-and-Realty-157989664276382/?hc_ref=PAGES_TIMELINE

 

[Tamalewagon]

Tuesdays bond market has opened flat despite favorable economic news. Stocks may be restricting bonds with early gains of 62 points in the Dow and 43 points in the Nasdaq. The bond market is currently down 1/32 (1.77%), which should keep this mornings mortgage rates unchanged from yesterdays early pricing.

Septembers Consumer Price Index (CPI) was posted at 8:30 AM ET this morning, revealing a 0.3% increase in the overall reading and a 0.1% rise in the more important core data. The overall reading pegged expectations but the core reading was softer than the 0.2% rise that was predicted. This indicates that inflationary pressures, excluding volatile food and energy prices, were a little weaker at the consumer level of the economy than many had thought. That makes the data good news for bonds and mortgage rates.

Tomorrow has two reports scheduled that we will be watching. The first is Septembers Housing Starts at 8:30 AM ET. This Commerce Department report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show an increase in new home starts between August and September. I believe we need to see a significant surprise in this data for it to have an impact on tomorrows mortgage rates.

The Federal Reserve will release their Beige Book report tomorrow afternoon. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we may see mortgage rates revise higher as a result.

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...

 

[Tamalewagon]

Wednesdays bond market has opened down slightly even though this mornings only economic data gave us favorable results. The stock markets are mixed with the Dow up 32 points and the Nasdaq down 4 points. The bond market is currently down 3/32 (1.75%), but we still should see a small improvement in this mornings mortgage rates due to strength in bonds late yesterday. If your lender revised lower yesterday afternoon, you may see a slight increase this morning. However, the net difference between Tuesdays morning pricing and this mornings rates should be an improvement.

This mornings sole piece of relevant economic data was September's Housing Starts at 8:30 AM ET. It revealed a surprising decline of 9.0% in new home groundbreakings. This was much weaker than the increase that was expected, meaning the new home portion of the housing sector was softer last month than many had thought. That is good news for bonds and mortgage rates, but unfortunately, this is considered to be only a minor report so its impact on todays trading has been minimal.

The Federal Reserve will release their Beige Book report layer today. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we may see mortgage rates revise higher as a result. If we do get a reaction in the markets, it will come during mid-afternoon trading.

There are three pieces of data set for release tomorrow, none of which are considered to be highly important. The first will be last week?s unemployment figures at 8:30 AM ET that are expected to show 249,000 new claims for unemployment benefits were filed. This would be an increase from the previous weeks 246,000 initial filings. Since rising claims is a sign of a weakening employment sector, the higher the number the better the news it is for mortgage shoppers. However, because this is only a weekly report, it usually takes a significant variance from forecasts for the number to directly impact mortgage rates.

The final two reports of the week will be posted at 10:00 AM ET tomorrow morning. One is Septembers Existing Home Sales data that will give us an indication of housing sector strength and mortgage credit demand by tracking home resales. It is expected to show a small decline in sales from August to September, meaning the housing sector was flat. That would be relatively good news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors. Ideally, it would show a sizable decline in sales that points toward a weakening housing sector.

Tomorrow also has Septembers Leading Economic Indicators (LEI) from the Conference Board. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.2% from Augusts reading. This would indicate that economic activity is likely to increase over the next couple of months. That would technically be bad news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase would not be of much concern to the bond and mortgage markets. A large decline would be favorable to mortgage pricing.

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...

 

[Tamalewagon]

Thursdays bond market has opened fairly flat with stocks calm and no significant surprises in this morning?s economic data. The major stock indexes are showing modest losses of 5 points in the Dow and 10 points in the Nasdaq. The bond market is currently up 1/32 (1.74%), which should keep this mornings mortgage rates at yesterdays early levels.

Yesterday afternoons release of the Fed Beige Book did not give us anything to be concerned or excited about. It showed that the economic activity strengthened modestly or moderately in most Fed regions between late August and early this month. This was expected and did not differ much from the previous update. Therefore, it had little impact on the bond and mortgage markets late yesterday.

The first of this mornings three pieces of economic data was last weeks unemployment figures at 8:30 AM ET. They showed that 260,000 new claims for unemployment benefits were filed last week. This was higher than the 249,000 that was expected and an increase from the previous weeks revised total of 247,000 initial filings. The increase is good news for bonds and mortgage rates because it points towards a weakening employment sector. However, since this is only a weekly snapshot, it did not cause much movement in the markets.

Septembers Existing Home Sales report was posted at 10:00 AM ET this morning. The National Association of Realtors announced a 3.2% increase in home resales last month. This was stronger than expected, indicating a strengthening housing market. That makes the data slightly negative for bonds and mortgage rates.

The final release of the week was Septembers Leading Economic Indicators (LEI) from the Conference Board at 10:00 AM. The release revealed a 0.2% increase in the indicators, matching expectations. The rise means the indicators are predicting modest economic growth over the next several months. This is considered to be a minor piece of data, so it has not had an influence on today?s trading or mortgage pricing.

Tomorrow has nothing of importance scheduled except for a couple of Fed member speaking engagements. Unless they say something totally unexpected or stocks make a significant move upward or downward, I suspect the day will be calm for 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Fridays bond market has opened in positive territory with stocks being in selling mode out of the gate. The major stock indexes are showing fairly sizable losses with the Dow down 92 points and the Nasdaq down 3 points. The bond market is currently up 6/32 (1.73%), but due to weakness late yesterday we should still see a slight increase in this morning?s mortgage rates if comparing to Thursdays early pricing.

There is nothing of importance scheduled for release today in terms of economic news. That should leave the bond market subject to any Fed speech surprises or noticeable moves in stocks. The Fed speaking engagements are of little concern to me, so if we see mortgage rates make an intraday revision today, it will likely be in reaction to a stock move. Weaker stocks usually help boost bond prices and lower mortgage rates. On the other hand, if stocks rebound, bonds may give back early gains and possibly lead to an upward revision to rates before the end of the day.

Next week has a good sized handful of economic releases scheduled, including an extremely important quarterly GDP reading. There are also a couple of Treasury auctions that we will be watching as they may influence rates. There is nothing scheduled for Monday and the most important data comes later in the week. Look for details on all of next week?s relevant 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Mondays bond market has opened in negative territory with stocks starting the week with solid gains. The Dow is currently up 87 points while the Nasdaq has gained 44 points. The bond market is currently down 7/32 (1.76%), but I don?t believe we will see much of a change in this mornings mortgage rates if comparing to Fridays morning pricing.

There is nothing of importance scheduled for release today. However, the rest of the week brings us the release of six economic reports that may influence mortgage rates in addition to two Treasury auctions that have the potential to do so also. The most important data comes later in the week though.

Octobers Consumer Confidence Index (CCI) will kick off the weeks calendar at 10:00 AM ET tomorrow morning. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show a drop in confidence from last months 104.1 reading. That would mean that consumers did not feel as good about their own financial and employment situations as they did last month, indicating they are less likely to make large purchases in the near future. That would be good news for the bond market because consumer spending makes up over two-thirds of our economy. Current forecasts are showing a reading of 100.8. The lower the reading, the better the news it is for mortgage rates.

Overall, look for Friday to be the most active day for mortgage rates with three reports scheduled including the initial GDP reading, although stock earnings news could still affect the broader markets and possibly mortgage rates any day. I suspect this will be a fairly active week for mortgage rates but the likelihood of seeing a significant move in rates seems to be somewhat limited to Friday unless something unexpected happens. However, it still would be prudent to maintain contact with your mortgage professional 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...

 

[Tamalewagon]

Tuesdays bond market has opened flat despite weaker than expected economic news. Stocks are calm also but mixed with the Dow up 17 points and the Nasdaq down 1 point. The bond market is currently up 1/32 (1.76%), but due to weakness late yesterday we should see a slight increase in this morning?s mortgage pricing if comparing to Mondays early rates.

Todays only economic data was October's Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board announced a reading of 98.6 that fell short of the 100.8 that was forecasted. It was also a sizable decline from September?s revised reading of 103.5, indicating that surveyed consumers were much less optimistic about their own financial situations this month than they were last month. Because waning confidence usually translates into weaker levels of consumer spending, this is good news for bonds and mortgage rates.

Tomorrow also has only one piece of economic data that we will be watching. That will be Septembers New Home Sales from the Commerce Department at 10:00 AM ET. This report covers the small percentage of home sales that last weeks Existing Home Sales report didn't include. It is expected to show little change in sales of newly constructed homes, but I don't see this report having much of an impact on tomorrow's mortgage rates regardless what it shows.

The first of this weeks two relevant Treasury auctions will come tomorrow also. 5-year Treasury Notes will be sold tomorrow, followed by Thursdays 7-year Note sale. If these sales are met with a strong demand from investors, particularly tomorrow'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 interest may create selling in the broader bond market and lead to slight upward revisions to 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Wednesdays bond market has opened in negative territory following mixed economic news. Stocks are showing early losses of 11 points in the Dow and 20 points in the Nasdaq. The bond market is currently down 10/32 (1.79%), which should push this mornings mortgage rates higher by slightly less than .125 of a discount point.

Septembers New Home Sales report was posted at 10:00 AM ET this morning. The Commerce Department announced a 3.1% rise in sales of newly constructed homes. This is compared to the little change that analysts were expecting. However, the headline increase doesn?t tell the whole story. A sizable downward revision in Augusts sales allows Septembers to be an increase. The number of Septembers sales was still lower than what was predicted. In other words, despite the unexpected increase, sales were still softer than forecasts. That makes the data good news for bonds and mortgage rates. Unfortunately, this is not considered to be a highly important release, so it has failed to offset the overall recent negative tone in bonds.

Also today is the first of this weeks two relevant Treasury auctions that may influence mortgage pricing. 5-year Treasury Notes are being sold today while 7-year Notes go tomorrow. If these sales are met with a strong demand from investors, bond prices may rise during afternoon trading. This could lead to improvements to mortgage rates shortly after the results are posted at 1:00 PM ET each day. But a lackluster investor interest may create selling in the broader bond market and lead to slight upward revisions to mortgage rates. If we see a reaction today, it will come during early afternoon trading.

In addition to the 7-year Note auction, there are a couple of economic reports being released tomorrow. One of them is much more important than the other. That would be Septembers Durable Goods Orders at 8:30 AM ET tomorrow. It gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Analysts are currently calling for no change in new orders. If we see a large increase in orders, mortgage rates will probably rise as bond prices fall. On the other hand, a significant decline 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. Therefore, a small move either way likely will have little effect on bond trading or mortgage pricing.

The second release will be last weeks unemployment figures, also at 8:30 AM ET. They are expected to show that 258,000 new claims for benefits were filed, down slightly from 260,000 of the previous week. Ideally, we want to see a large increase in initial claims, indicating employment sector weakness. The higher the number of claims, the better the news it is for mortgage rates. It is worth noting though that this is only a weekly snapshot, so I am not expecting it to have much of an impact on tomorrows mortgage pricing. Focus will be on the Durable Goods report.

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...

 

[Tamalewagon]

Fridays bond market has opened relatively flat following the release of mixed economic data. The major stock indexes are showing fairly minor gains of 39 points in the Dow and 1 point in the Nasdaq. The bond market is currently up 1/32 (1.84%), which with some strength late yesterday should slightly improve this morning?s mortgage rates if comparing to Thursdays morning pricing.

The biggest of this mornings three economic report was the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It came in at up 2.9%, stronger than the 2.5% that was expected and higher than the 2nd Quarter?s final reading of 1.4%. This means that the economic was stronger during the July through August months than many had thought. Because bonds tend to thrive in weaker economic conditions, the report is considered bad news for bonds and mortgage rates.

Also at 8:30 AM this morning was the 3rd Quarter Employment Cost Index (ECI). It showed a 0.6% increase in employer costs for wages and benefits, matching forecasts. This report had no impact on todays mortgage rates since it failed to show any surprises and is generally considered to be of low importance to the bond and mortgage markets.

The final report of the week was the University of Michigans revised Index of Consumer Sentiment for October. They announced a reading of 87.2 that fell short of the 88.3 that was expected. More importantly, it was a decline from the previous reading of 87.9, indicating consumer confidence is slipping. That is good news for mortgage rates because waning confidence usually translates into softer levels of consumer spending that fuels economic growth.

Next week is going to be an active week in terms of relevant economic releases and other events that may influence the markets and mortgage rates. It starts with Mondays release of Personal Income and Outlays report that certainly can affect mortgage pricing. The rest of the week brings us plenty of data, including a couple of highly important reports and an FOMC meeting. Look for details on all of next weeks activities in Sunday evenings 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...

 

[Tamalewagon]

Mondays bond market has opened in positive territory following slightly favorable economic news. The stock markets are starting the week pretty calm with the Dow up 10 points and the Nasdaq up 6 points. The bond market is currently up 5/32 (1.83%), which should improve this mornings mortgage rates less than .125 of a discount point over Fridays early pricing.

Septembers Personal Income and Outlays report kicked off this weeks calendar at 8:30 AM ET this morning, revealing a 0.3% rise in income and a 0.5% increase in spending. The income reading fell just short of the 0.4% that was expected while the rise in spending pegged forecasts. Because we saw slightly weaker than predicted results, we can consider the data favorable for mortgage pricing since it indicates that consumers earned less and may not have enough money available to spend as many had thought.

The rest of the week brings us the release of five more economic reports for the bond and mortgage markets to digest in addition to another FOMC meeting. We have data or other events that are expected to influence mortgage rates set every day, so we could see plenty of movement in rates this week. The data scheduled ranges from minor to extremely important, meaning some reports will have a much bigger impact on rates than others.

Tomorrows only release is one of the very important reports of the week. That will be the Institute for Supply Managements (ISM) manufacturing index for October at 10:00 AM ET. This index measures manufacturer sentiment, which is important because it gives us an indication of manufacturing sector strength. It is considered to be one of the more important reports we see each month, partly because it is the first every month that tracks the preceding months activity. Tomorrows release is expected to show a reading of 51.7, indicating that manufacturer sentiment rose modestly from Septembers level. This means more surveyed manufacturing executives felt business improved during the month than in September, hinting at slightly stronger manufacturing sector activity. A smaller than expected reading would be good news for bonds and likely lead to lower mortgage rates.

Overall, the single most important day is Friday due to the release of Octobers Employment report but tomorrow is likely to be pretty active also. We have plenty of relevant data set for release this week along with the FOMC meeting. This makes it quite possible that we will see another active week for mortgage rates. Accordingly, please maintain contact with your mortgage professional if still floating a rate and closing in the near future.

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...

 

[Tamalewagon]

Tuesdays bond market has opened in negative territory with todays highly important economic news showing unfavorable results and stronger than expected manufacturing news from overseas. The major stock indexes are showing minor losses of 10 points in the Dow and 6 points in the Nasdaq. The bond market is currently down 11/32 (1.86%), which should push this mornings mortgage rates higher by approximately .125 of a discount point.

The Institute for Supply Management (ISM) gave us their manufacturing index for October at 10:00 AM ET this morning. It showed a reading of 51.9 that was a little higher than the 51.7 that was expected and September?s 51.5. This means that more surveyed manufacturing executives felt business improved last month than did in September. That makes the data bad news for bonds and mortgage rates. However, bonds appeared to be headed towards a bad morning even before this report was released. Therefore, today?s increase in rates is not just a result of this piece of data.

Tomorrow has two events scheduled that may influence mortgage rates. The days only economic relevant economic data is the ADP Employment report at 8:15 AM ET. It has the potential to cause some movement in the markets if it shows much stronger or weaker numbers than expected. This report tracks changes in private-sector jobs of ADPs clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we have seen reaction to the report, we should be watching it. Analysts are expecting it to show that 165,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.

Tomorrow also has the adjournment of this weeks FOMC meeting. It is widely expected that the Fed will not make a change to key short-term interest rates. Chairperson Janet Yellen and friends have indicated they expect to make a rate hike before the end of the year, but it would come as a major surprise if it came tomorrow. The Fed traditionally does not make changes to monetary policy close to a presidential election. Therefore, the consensus is that the rate hike will come during December?s FOMC meeting. The meeting will adjourn at 2:00 PM ET and does not include economic projections or a press conference. These meetings normally have a strong likelihood of causing volatility in the markets. However, I believe this one will have less of an impact than usual as it is not likely to bring many surprises.

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...

 

[Tamalewagon]

Wednesdays bond market has opened in positive territory extending yesterdays late strength. The stock markets are relatively calm as traders await the results of this weeks FOMC meeting that will come this afternoon. The Dow is currently showing a 10 point loss while the Nasdaq has slipped 3 points. The bond market is currently up 3/32 (1.81%), which with yesterdays afternoon gains should improve this mornings mortgage rates by approximately .125 of a discount point. If your lender made an intraday improvement yesterday afternoon, you may not see much of a change in this mornings pricing.

Todays only relevant economic data came at 8:15 AM ET when Octobers ADP Employment report was released. It showed that 147,000 new private sector jobs were added to the economy last month, falling short of the 165,000 that was expected. That headline number appears to be good news for bonds. However, offsetting that number was a sizable upward revision to Septembers payrolls (+48,000) that caused some confusion. I would like to say that this report is good news and gives us optimism that Fridays governmental version will come in softer than expected, but todays release caused more head-scratching than anything else.

Later today we have the adjournment of this weeks FOMC meeting to deal with. It is widely expected that the Fed will not make a change to key short-term interest rates at this time. Chairperson Janet Yellen and friends have indicated they expect to make a rate hike before the end of the year, but it would come as a major surprise if it came today. The Fed traditionally does not make changes to monetary policy close to a presidential election. Therefore, the consensus is that the rate hike will come during Decembers FOMC meeting. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon trading. This meeting does not include economic projections or a press conference, however the post-meeting statement will be analyzed closely by market participants for confirmation that a rate hike will indeed come next month.

Look for an update to this report shortly after the markets have an opportunity to react to the FOMC meeting statement. There are a couple of economic reports set for release tomorrow, although none of them are considered to be highly important or potential market movers. They will be addressed in this afternoons revision.

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...

 

[Tamalewagon]

WEDNESDAY AFTERNOON UPDATE:
This weeks FOMC meeting has adjourned with no change to key short-term interest rates. That was widely expected, partly due to next weeks presidential election. The post-meeting statement didn?t reveal anything too drastic but did give hints that support a December rate hike. The statement noted that conditions continue to support a move and that inflation, which has been stubbornly low and well under the Feds target rate, has strengthened. They also indicated that there is a balanced risk between economic growth and potential near-term hurdles, same as they did leading up to last years .25% bump in key rates.

Overall, nothing too surprising in the statement. A few minor notes that help support the theory that a rate hike is coming in the near future. However, there was a strong consensus before this meeting that the Fed would use their December FOMC meeting to make such a move. As I suspected, the news has not had a significant impact on the financial or mortgage markets. Stocks are lower than they were this morning, but very close to their pre-adjournment levels. The bond market is better than where it was when we posted this morning and about the same as right before the meeting adjourned. We may see some lenders improve rates slightly before the end of the day. Although I believe most lenders will wait for tomorrow?s opening to reflect this afternoon?s gains.

Todays only relevant economic data came at 8:15 AM ET when Octobers ADP Employment report was released. It showed that 147,000 new private sector jobs were added to the economy last month, falling short of the 165,000 that was expected. That headline number appears to be good news for bonds. However, offsetting that number was a sizable upward revision to Septembers payrolls (+48,000) that caused some confusion. I would like to say that this report is good news and gives us optimism that Friday?s governmental version will come in softer than expected, but today?s release caused more head-scratching than anything else.

Tomorrow has three pieces of data we will be watching, none of which are considered to be highly important. Last weeks unemployment figures will start the day at 8:30 AM ET. They are expected to show that 256,000 new claims for unemployment benefits were filed last week. This would be a slight decline from the previous weeks 258,000 initial claims, hinting that the employment sector strengthened just a bit last week. Ideally, the bond market would prefer to see a significant increase in new filings as rising claims point towards a softening employment sector.

Next up is the 3rd Quarter Productivity reading, also at 8:30 AM ET. It is expected to show a 1.8% improvement in worker productivity during the third quarter. A larger increase would be good news for the bond market because higher levels of employee productivity allow the economy to expand without inflationary pressures being a concern. This is a relatively low importance report, meaning it will take a significant variance from forecasts for it to directly affect mortgage rates.

Septembers Factory Orders data will finish the days releases at 10:00 AM ET. This report is similar to last weeks Durable Goods Orders release except it includes orders for both durable and non-durable goods. It is expected to show a 0.2% increase in new orders from August's level. A large decline would be good news for the bond market and mortgage rates while an unexpected rise would be bad news and could push rates slightly higher tomorrow morning since it would indicate economic strength. It is worth noting though, that this report is not considered to be highly important to mortgage rates either.

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...

 

[Tamalewagon]

Thursdays bond market has opened in negative territory despite mostly bond-friendly economic news in this mornings releases. Stocks are mixed with the Dow up 23 points and the Nasdaq down 2 points. The bond market is currently down 6/32 (1.82%), but due to post-FOMC strength yesterday, we should still see a slight improvement in this mornings mortgage rates if comparing to Wednesdays morning pricing. If your lender did improve pricing before closing yesterday, then you may see a small increase in this mornings rates.

Last weeks unemployment figures started this morning?s economic news. The 8:30 AM release showed that 265,000 new claims for unemployment benefits were filed last week, up from 258,000 the previous week. Analysts were expecting to see a slight decline in new claims, not an increase. Since rising claims is a sign of a softening employment sector, we can consider this news to be favorable for bonds and mortgage rates. Unfortunately, none of today?s three reports were considered to be of high importance, limiting their influence on this morning?s mortgage pricing.

The 3rd Quarter Productivity reading was also posted early this morning, revealing a 3.1% increase in worker productivity. That was much stronger than the 1,8% that was predicted, but in this case that is good news for bonds. Higher levels of worker productivity helps allow economic growth without inflation being a problem. Even a secondary reading that tracks labor costs gave results that were favorable to bonds. Again though, a low importance report makes it difficult for the data to directly affect mortgage rates.

Septembers Factory Orders data was posted at 10:00 AM ET. The Commerce Department announced a 0.3% increase in new orders for durable and non-durable goods. This was slightly stronger than the 0.2% that was expected. However, it was a minor miss in a moderately important report. In other words, it is not negatively affecting mortgage rates.

Tomorrow brings us the release of the almighty monthly Employment report. The Labor Department will post Octobers Employment report at 8:30 AM ET tomorrow, giving us key readings on the employment sector. The most important ones are the unemployment rate, the number of new jobs added or lost during the month and average hourly earnings. Current forecasts call for a 0.1% drop in the unemployment rate, slipping to 4.9%, an increase in payrolls of 176,000 and a 0.3% increase in average earnings. Weaker than expected readings should renew concerns about the labor market and rally bonds enough to improve mortgage rates, especially if the stock markets react poorly to the news. This is a major economic release, so expect to see some volatility in the financial and mortgage markets tomorrow 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...

 

[Tamalewagon]

Mondays bond market has opened in negative territory as traders react to weekend political news. Strong stock gains are also contributing to this morning bond weakness. The Dow is currently up 277 points while the Nasdaq is up 98 points. The bond market is currently down 12/32 (1.81%), which should push this mornings mortgage rates slightly higher than Fridays morning pricing.

Today has nothing of importance scheduled for release. If we see an intraday change to mortgage rates it likely will be a result of movement in stocks. If the major stock indexes extend this mornings sizable gains, we could see more pressure in bonds that lead to an upward revision in mortgage pricing. On the other hand, if stocks give back some of this mornings improvements, we may see bonds move higher and mortgage rates revise lower before the end of the day.

The rest of this holiday-shortened week brings us the release of only one monthly economic report for the markets to digest along with two relevant Treasury auctions. It is worth noting though that the sole economic report is non-governmental and comes on a day that the bond market will be closed. Most banks and the bond market will be closed Friday in observance of the Veteran's Day holiday, but the stock markets will be open for business.

Overall, I am not expecting to see an overly active week for mortgage rates, although we should see movement more than one day. Wednesday is the best candidate for most important day due to Tuesdays late election results and then the afternoon 10-year Treasury Note auction. We could see the markets get active at any time though, so it is recommended that you still maintain contact with your mortgage professional if still floating an interest rate and closing soon.

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...

 

[Tamalewagon]

Tuesday?s bond market has opened up slightly as the markets await election results. The stock markets are showing minor losses with the Dow down 38 points and the Nadaq down 15 points. The bond market is currently up 2/32 (1.82%), which should keep this morning?s mortgage rates at yesterday?s morning levels.

There is nothing in terms of economic news being posted today. The big event is the presidential election but we won?t get reliable results until this evening. We could see some movement throughout the day as exit polls are released. That means we won?t get a real reaction in the markets until tomorrow morning. It is safe to assume that tomorrow morning is going to be very active for the financial and mortgage markets.

So, what happens once results are known? Over the long-term it is anyone?s guess whether stocks and bonds will be better or lower than they are today. However, the immediate knee-jerk reaction is a little more predictable in my opinion. I believe that if Trump wins the election, the first move for stocks will be lower and bonds should benefit from that selling. As funds move into bonds, prices rise and yields move lower. Since mortgage rates tend to follow bond yields, this would be good news for mortgage shoppers. I think we will see the opposite if Clinton is the victor with stocks moving higher tomorrow, drawing funds away from bonds. The bond selling would cause mortgage rates to move higher. This is obviously just speculation on what the immediate reaction will be. It also does not take into consideration if the results are close enough to cause one candidate to extend the process by litigation in the courts.

Tomorrow also has no relevant economic data set for release. We do however, have the first of this week?s two important Treasury auctions to watch in addition to election results. 10-year Treasury Notes will be sold tomorrow while 30-year Bonds go Thursday, giving us an indication of demand for long-term securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading those days. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would probably result in upward revisions to mortgage rates. Tomorrow?s 10-year Note auction usually has the bigger impact on rates than 30-year Bonds. Results are posted at 1:00 PM ET each day, making this an afternoon event.

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...

 

[Tamalewagon]

Mortgage rates are running away from us. If you are going to finance...finance soon.

 

[Tamalewagon]

Wednesdays bond market has opened down sharply following news that Donald Trump won the presidential election last night. The stock markets initially looked as if they were going to be following suit of the global markets with significant losses also, but have since recovered those massive overnight losses. The Dow is currently up 60 points while the Nasdaq is down 4 points. The bond market is currently down 29/32 (1.96%), which should push this mornings mortgage rates higher by approximately .250 - .375 of a discount point if comparing to yesterdays morning levels.

It is apparent that the markets were expecting a Clinton victory. The initial stock selling after Trump won is not a surprise. The global markets reacted in unison during overnight and early morning trading. Stocks have seemed to settled down and are much better now than they were just a few hours ago. What is a surprise is that bonds have reacted so negatively to the news. A Trump victory was expected to cause stock selling and bond buying. Bonds were already showing heavy losses when the Dow looked to open down almost 400 points. In other words, we cannot blame the stock recovery for the bond selling. Rumors have the bond market weakness being blamed on international selling of Treasuries. This has pushed the yield on the benchmark 10-year Treasury Note to its highest level since late March.

Where do we go from here? That is a great question that does not have a simple answer. Assuming stocks don?t make a significant move either direction from their current levels, we could have a zero net effect on stocks for the time being. As for bonds and mortgage rates, there is more of a concern there. Todays move in yields is significant as it takes us to the last sub-2.0% resistance level in the 10-year. If it stays where it is now, we could very easily and quickly see yields between 2.10% and 2.21% in the near future. Since mortgage rates tend to follow bond yields, this means higher mortgage rates are likely. Ideally, we would like to see the bond market hold its current level. However, that may be difficult to do if stocks begin to move higher and investors move funds from bonds into stocks.

There is something else to also consider with todays reaction in the markets. If the impact the election has had on the markets goes beyond short-term losses (domestically and internationally), the Fed may opt to not raise key interest rates at the FOMC meeting next month. It is difficult to say how that may influence bonds and mortgage rates. If I have to make a guess, it would be that bonds would react favorably to the news, helping to push mortgage pricing lower. That is pure speculation at this point though.

Todays does not have any relevant economic data being posted (not that it would have mattered anyhow). We do however, have the first of this weeks two important Treasury auctions to watch this afternoon. 10-year Treasury Notes are being sold today while 30-year Bonds go tomorrow, giving us an indication of demand for long-term securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading these days. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would probably result in upward revisions to mortgage rates. It is hard to imagine that todays auction will be well-received considering the broader bond selling taking place at the moment. Although, the higher yields could attract some new interest. We will see. Results will posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

Besides the 30-year Bond auction tomorrow, the only event worth noting is release of last weeks unemployment figures. They are expected to show that new claims for unemployment benefits slipped from 265,000 to 262,000. Good news for mortgage shoppers would be a sizable spike as rising claims is a sign of a weakening employment sector. Since this is only a weekly update, it often has little or no impact on mortgage rates unless it shows a sizable variance from forecasts.

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...

 

[Tamalewagon]

As predicted...rates jumped.

 

[Go-Fly]

As predicted...rates jumped.

How much was the jump and what do you think they will be by the end of December?

 

[Tamalewagon]

How much was the jump and what do you think they will be by the end of December?

Yesterday a conforming rate and term refinance was at 3.375% at zero points...today the rate is around 3.75% at zero points. That my friends is quite a jump in price. As far as a rate guesstimate for the end of December? Impossible at this time. Too many unknown's. Rates could continue to climb with the hope/outlook of a more stabile and/or building economy or settle back down after they hype of the election. Lenders have always been quick to react to the negative but extremely slow to reduce the rates after corrections have been made. My theory has always been "a bird in the hand.." and this seems to be correct 90% of the time. In other words...I wouldn't wait to see what happens in December to make your decision. If the FED raises the rate to save face and prove she can raise the rate just because (sounds like a petulant child) she can, we are headed for worse still.

Plan accordingly.

 

[Tamalewagon]

Thursdays bond market has opened down again as yesterdays post-election sell-off in bonds continues. The stock markets are mixed with the Dow extending its post-election rally but the Nasdaq is giving back some of its recent gains. The Dow is currently up 104 points while the Nasdaq is down 66 points. The bond market is currently down 8/32 (2.09%), which means another increase to mortgage rates. There were widespread rate increases intraday yesterday as stocks moved higher and bonds continued to slide. The net difference between this morning?s rates and yesterday?s morning pricing should be approximately .500 of a discount point. Just how much of an increase you will see this morning depends on how many and the size of the revisions your lender made yesterday afternoon.

Todays only economic data was last week?s unemployment figures at 8:30 AM ET. They showed that 254,000 new claims for unemployment benefits were filed last week, down from the previous weeks 265,000 initial claims. Analysts were expecting to see 262,000 new filings, making the data bad news for bonds and mortgage pricing. However, this data is not relevant today considering the significant volatility in the financial markets over the past two days.

We also have the 30-year Treasury Bond auction later today. As expected, yesterdays 10-year Note sale went quite poorly with the benchmarks showing little demand for the securities. There is no reason to believe todays sale will do much better. Therefore, do not look for this event to provide some relief this afternoon from the rapidly rising bond yields and spike in mortgage rates. Results will be posted at 1:00 PM ET, so if there is a reaction it will come during early afternoon trading.

Tomorrow morning does bring us this weeks only monthly economic data, although it likely will not draw much attention. Novembers preliminary reading of the University of Michigans Index of Consumer Sentiment will be posted late tomorrow morning. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 87.5, up a little from Octobers final reading of 87.2. That would be considered negative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. And with consumer spending so important, any related data is watched closely. The lower the reading, the better the news it is for mortgage shoppers.

It is also worth noting that the bond market will be closed tomorrow in observance of the Veterans Day holiday. The stock markets will be open for trading, but most banks should be closed. The bond market will reopen Monday morning for regular hours.

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...

 

[Tamalewagon]

The bond market is closed today in observance of the Veteran?s Day holiday and will reopen Monday morning. However, the stock markets are open today and are showing minor losses of 10 points in the Dow and 3 points in the Nasdaq. We did see weakness in bonds late yesterday, causing many lenders to revise rates higher. If your lender is open for business today and issues new rates, you should see them be approximately .125 of a discount point higher than Thursday?s morning pricing.

Yesterday?s 30-year Treasury Bond auction went poorly as it was expected to do. However, the heavy selling in bonds did not start until well after the results of the sale were posted. This means the auction didn?t influence bond trading or mortgage rates. The weakness came as part of the overall post-election negative momentum in bonds. I am sure there was also some pre-holiday selling involved as investors protect themselves over the long weekend.

Despite the holiday, there was a piece of relevant economic news posted this morning. November's preliminary reading of the University of Michigan's Index of Consumer Sentiment was released just before 10:00 AM ET, showing a reading of 91.6. This was well above expectations of 87.5 and a sizable increase from the previous reading of 87.2. That means surveyed consumers were much more optimistic about their own financial and employment situations than many had thought. Because rising confidence usually translates into stronger levels of consumer spending, this is bad news for bonds and mortgage rates.

Next week does have several important economic reports in addition to a lot of Fed member speaking engagements. I don?t see anything set for Monday that we need to be concerned with except a couple of those speeches. Look for details on all of next week?s mortgage-relevant 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

 

[530RL]

The bond market is closed today in observance of the Veteran?s Day holiday and will reopen Monday morning. However, the stock markets are open today and are showing minor losses of 10 points in the Dow and 3 points in the Nasdaq. We did see weakness in bonds late yesterday, causing many lenders to revise rates higher. If your lender is open for business today and issues new rates, you should see them be approximately .125 of a discount point higher than Thursday?s morning pricing.

Yesterday?s 30-year Treasury Bond auction went poorly as it was expected to do. However, the heavy selling in bonds did not start until well after the results of the sale were posted. This means the auction didn?t influence bond trading or mortgage rates. The weakness came as part of the overall post-election negative momentum in bonds. I am sure there was also some pre-holiday selling involved as investors protect themselves over the long weekend.

Despite the holiday, there was a piece of relevant economic news posted this morning. November's preliminary reading of the University of Michigan's Index of Consumer Sentiment was released just before 10:00 AM ET, showing a reading of 91.6. This was well above expectations of 87.5 and a sizable increase from the previous reading of 87.2. That means surveyed consumers were much more optimistic about their own financial and employment situations than many had thought. Because rising confidence usually translates into stronger levels of consumer spending, this is bad news for bonds and mortgage rates.

Next week does have several important economic reports in addition to a lot of Fed member speaking engagements. I don?t see anything set for Monday that we need to be concerned with except a couple of those speeches. Look for details on all of next week?s mortgage-relevant 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

Ten year has moved from 1.60 at the end of September to 2.14 yesterday and most of the economic data has exceeded expectations. Out of curiosity why wouldn't you lock over 60?

 

[Tamalewagon]

Mondays bond market has opened downs sharply again as last weeks post-election sell-off continues. Stocks are starting the week mixed with the Dow up 64 points and the Nasdaq down 1 point. The bond market is currently down 34/32 (2.25%), which should push this mornings mortgage rates higher by approximately .500 - .625 of a discount point if comparing to Thursdays morning pricing. The bond market was closed Friday for the Veteran?s Day holiday. Some of that increase is a result of weakness late Thursday, but the majority is from this mornings trading.

There is nothing of importance scheduled for release today. We can?t even say stocks are driving bond trading this morning because there appears to be little correlation between the bond selling and this morning?s stock movement. As previously mentioned last week, the benchmark 10-year Treasury yield skyrocketed after breaking 1.96%. There was little resistance getting to its current level, blowing right through a couple points that looked like resistance points before last week. It is too soon to say when this is likely to end, but I suspect it could be fairly soon. 2.25% is another mark we need to watch. If we close above that level, 2.33% or even breaking 2.50% is a possibility. The next day or two will tell us a lot in terms of what we can expect bonds to do and which direction they may be heading. I believe there will be a point in the near future that we will get some relief. However, until then it would be wise to be extremely cautious regarding interest rates and locking or floating.

This week has six economic reports that we will be watching for their impact on mortgage rates. The Commerce Department will give us Octobers Retail Sales figures early tomorrow morning. This data measures consumer level or retail spending. It is considered extremely important to the markets because consumer spending makes up over two-thirds of the U.S. economy. It is expected to show a 0.6% increase in retail-level spending, meaning consumers spent more last month than they did in September. A larger increase in spending would be considered negative news for bonds because rising spending fuels economic growth and raises inflation concerns in the bond market. If tomorrow's report reveals a smaller increase that indicates consumers spent less than thought, bonds should react favorably, pushing mortgage rates lower. If it shows a larger rise, mortgage rates will likely move higher.

Overall, I don?t believe the volatility is quite done yet. It is too difficult to predict which days are the most important as any day could be extremely active (as we have seen today). I suspect we will see intraday changes to rates multiple days and possibly multiple changes at least one day. Until the markets stabilize and some type of correction takes place, it is strongly recommended that you maintain contact with your mortgage professional if you have not locked an interest rate yet.

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...

 

[Tamalewagon]

Tuesday?s bond market has opened well in positive territory, at least temporarily pausing the shocking sell-off that started election night. The stock markets are mixed again with the Dow down 40 points and the Nasdaq up 42 points. The bond market is currently up 13/32 (2.21%), which should improve this morning?s mortgage rates by approximately .125 of a discount point if comparing to Monday?s early pricing. Weakness during afternoon trading yesterday led to many lenders revising rates higher before the end of the day. If your lender did make an intraday change yesterday, you should see a better improvement in this morning?s rates.

October's Retail Sales report was posted early this morning. The Commerce Department announced a 0.8% increase in retail-level spending last month, exceeding expectations of a 0.6% increase. This means that consumers spent more last month than many had thought. Even a secondary reading that tracks sales excluding more volatile and costly auto transactions was stronger than forecasted. Because consumer spending makes up such a big part of our economy, this is bad news for bonds and mortgage rates. Fortunately, traders shrugged off the news, allowing bonds to recover a small portion of their recent losses. This is particularly true because today?s report is usually considered to be highly important.

Tomorrow has two pieces of data to watch. The first is October's Producer Price Index (PPI) at 8:30 AM ET, which is one of the two key inflation readings on tap this week. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. Signs of rapidly rising inflation make long-term securities such as mortgage-related bonds less attractive to investors and leads to higher mortgage rates. The overall reading is expected to show a 0.3% rise from September's level while the core data is expected to rise 0.2%. Weaker than expected readings would be good news for bonds and mortgage rates, while a larger than forecasted increase in the core reading could lead to higher mortgage rates tomorrow morning.

October's Industrial Production data will come at 9:15 AM ET tomorrow. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to reveal a 0.2% increase in production, indicating little strength in the manufacturing sector. Stronger levels of production would be considered bad news for the bond market and mortgage rates, but this report is not expected to greatly influence the markets. Therefore, it will likely take a sizable variance from forecasts for it to have a noticeable impact on tomorrow's mortgage pricing.

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...

 

[Tamalewagon]

Ten year has moved from 1.60 at the end of September to 2.14 yesterday and most of the economic data has exceeded expectations. Out of curiosity why wouldn't you lock over 60?

These rate lock advisory's are generated by Mortgage Daily News and they do not represent my opinion 100%. As far as the long term outlook I would absolutely advise locking and loading now as I do not see rates dropping back to the low's any time soon.

 

[Tamalewagon]

Wednesdays bond market has opened in negative territory as the downward momentum in bonds takes over again after a one day reprieve. Stocks are showing relatively minor losses of 45 points in the Dow and 18 points in the Nasdaq. The bond market is currently down 3/32 (2.23%), which should keep this mornings mortgage rates close to yesterdays early pricing.

Octobers Producer Price Index (PPI) was posted at 8:30 AM ET this morning, revealing no change in the overall reading and a 0.2% decline in the more important core data that excludes more volatile food and energy prices. Both readings were softer than expectations (+0.3% and +0.2%), meaning inflationary pressures were weaker than expected at the producer level of the economy. This is good news for bonds and mortgage rates because rising inflation makes long-term securities less appealing to investors.

Next up was Octobers Industrial Production data at 9:15 AM ET tomorrow. It showed no change from Septembers level of output, falling short of the 0.2% increase that was forecasted. This is a sign that manufacturing activity is not as strong as some analysts think, making the data good news also. Unfortunately, the market doesn?t seem to be impressed as it gives up most of yesterdays gains.

Tomorrow has three economic reports scheduled that may have an impact on mortgage rates, all at 8:30 AM ET. The most important of them is Octobers Consumer Price Index (CPI) from the Labor Department. The CPI is the sister report to today?s PPI, except it measures inflationary pressures at the consumer level of the economy and is one of the most important reports the bond market sees each month. If it reveals stronger than expected readings, indicating that inflationary pressures are rising at the consumer level, the bond market will probably react negatively and cause mortgage rates to move higher. Analysts are expecting to see a 0.4% increase in the overall reading and a 0.2% increase in the core data.

Also at 8:30 AM tomorrow will be Octobers Housing Starts. This report gives us an indication of housing sector strength, but usually does not have a noticeable impact on mortgage rates. I don't expect this months version to be any different unless it varies greatly from analysts forecasts. It is expected to show an increase in starts of new homes, meaning the new home portion of the housing sector strengthened last month.

The final piece of data that we will be watching tomorrow is the weekly unemployment update. It is expected to show that 257,000 new claims for unemployment benefits were filed last week. That would be a small increase from the previous weeks 254,000 new claims. The higher the number of initial filings, the better the news it is for mortgage rates because rising claims is a sign of a softening employment sector.

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...

 

[Tamalewagon]

If Yellen raises the FED rate, be prepared for further mortgage rate hikes...


Thursdays bond market has opened in negative territory, erasing gains made late yesterday. The stock markets are calm with the Dow up 2 points and the Nasdaq up 14 points. The bond market is currently down 10/32 (2.24%), which should keep this mornings mortgage rates at Wednesday?s early level. If your lender did revise rates slightly lower yesterday, you should see an increase this morning by the same amount.

We got unfavorable news from two of todays three reports, although the good news came in the most important of the group. That would be Octobers Consumer Price Index (CPI) that showed a 0.4% increase in the overall reading and a 0.1% rise in the core data. The overall reading matched expectations, but the core data was forecasted to rise 0.2%. This is good news because the core reading excludes more volatile food and energy prices and is watched much closer than the overall reading. Therefore, since it shows core inflation to be softer than thought, we can consider the data good news for bonds and mortgage rates.

Also at 8:30 AM this morning was Octobers Housing Starts. The Commerce Department announced a surprising 25.5% jump in new home groundbreakings. This was much stronger than expected and points towards a strengthening housing sector. As with other signs of economic strength, this is negative for long-term securities such as mortgage-related bonds.

The third report of the morning also showed some surprising results. The weekly unemployment update showed that 235,000 new claims for unemployment benefits were filed last week, down from the previous weeks 254,000 initial claims. This was well below forecasts, which were calling for 257,000 filings and the fewest number since late November 1973. Since falling claims is a sign of employment sector strength, this data is bad news for mortgage rates.

Fed Chair Janet Yellen spoke before the Joint Economic Committee of Congress this morning. Her prepared statement and testimony hasn?t given any surprises. For the most part, a Fed rate hike is in play for next month but not guaranteed. Her comments didn?t sway that consensus.

Tomorrow does have a minor piece of data set for release. The Conference Board will release their Leading Economic Indicators (LEI) for October at 10:00 AM tomorrow. This is a moderately important report that attempts to predict economic activity over the next three to six months. It is expected to show a 0.1% increase, meaning economic activity will likely rise modestly over the next couple of months. Generally speaking, this would be neutral news for bonds. However, since this data is considered only moderately important, its results need to miss forecasts by a wide margin for it to affect 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Wednesdays bond market has opened well in negative territory following stronger than expected results in this mornings important economic data. Stocks are not moved by the data with the Dow up 8 points and the Nasdaq down 18 points. The bond market is currently down 21/32 (2.38%), which will push this mornings mortgage rates higher by approximately .375 of a discount point.

Yesterdays 5-year Treasury Note auction went fairly well, just not well enough to boost bond prices. The benchmarks we use to gauge investor demand for the securities showed an above average level of interest. With the current environment in the bond market being negative, this was not good enough to help lower mortgage rates yesterday afternoon. At the very least though, it helps us to remain optimistic about todays 7-year Note sale. The bad news is that the batch of data posted this morning and the afternoon FOMC-related release could make it difficult for this auction to draw much attention today.

Octobers Durable Goods Orders kicked off todays busy calendar at 8:30 AM ET. The Commerce Department announced a 4.8% jump in new orders for big-ticket products such as airplanes, appliances and electronics. This was a much larger rise in orders than the 1.1% increase that was expected. Even a secondary reading that excludes more volatile and costly airplane and transportation-related orders came in much stronger than predicted (+1.0% vs 0.2%). These increases indicate that the manufacturing sector was stronger last month than many had thought, making the news clearly negative for bonds and mortgage rates.

Last weeks unemployment figures were also released early this morning. They showed that 251,000 new claims for unemployment benefits were filed last week, up from the previous weeks revised total of 235,000. The rise in initial filings is favorable news for bonds since it hints that the employment sector weakened last week. This is especially true because the number of claims was higher than the 243,000 that was forecasted. However, it is only a weekly snapshot so it draws less of a reaction and came at the same time as the important Durable Goods Orders report. Therefore, the news has had little impact on this morning?s bond trading or mortgage pricing.

There were two reports released late this morning also. The first was the revised November reading to the University of Michigans Index of Consumer Sentiment just before 10:00 AM ET. It came in at 93.8, which was an increase from the preliminary reading of 91.6. Market analysts were calling for no change in sentiment, meaning consumers were more optimistic about their financial situations than previously estimated. The unexpected rise is bad news because strengthening confidence usually means consumers are likely to spend more than if they were less optimistic about their job or finances.

Octobers New Home Sales report finished this weeks economic calendar at 10:00 AM ET today. It revealed that sales of newly constructed homes fell 1.9% last month. The decline from Septembers sales was larger than expected, meaning the new home portion of the housing sector was not as strong as many had thought. And that allows us to consider the data slightly favorable for mortgage rates. Unfortunately, this is considered a minor piece of data and does not carry the significance to offset todays early losses in bonds.

The Fed will release the minutes from the November 1st-2nd FOMC meeting at 2:00 PM ET today. Market participants will be looking for any indication of the Fed's next move regarding monetary policy, particularly if a rate increase will come at next month FOMC meeting. This release is one of those that may cause some volatility in the markets after they are posted, or could be a non-factor. If they show anything surprising regarding when the Fed will raise key short-term interest rates again, we will see some movement in rates later today. If there is a reaction to them, it will come during mid-afternoon trading.

Due to the Thanksgiving Holiday, the financial and mortgage markets will be closed tomorrow. There is no relevant economic data or other events that are expected to influence mortgage rates scheduled for Friday. Both the stock and bond markets are set to close early Friday, so it is likely that it will be a day of thin trading as many traders will be home for the long holiday. The potential problem with thin trading is that any reaction to news is exaggerated by the lower volume of trades.

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... Lock if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Mondays bond market has opened in positive territory as traders return from the holiday weekend. Stocks are helping the cause with early losses of 45 points in the Dow and 9 points in the Nasdaq. The bond market is currently up 6/32 (2.33%), which should improve this morning?s mortgage rates by a little more than .125 of a discount point.

There is nothing set for release today that is relevant to mortgage rates. The rest of the week has seven economic reports being released that may affect mortgage rates, including two that are considered to be highly important to the financial and mortgage markets. Some of this data can also influence the Fed's monetary policy decision next month, raising the potential of another round of strong volatility in the markets and mortgage rates.

Kicking off this week?s calendar will the first revision to the 3rd Quarter Gross Domestic Product (GDP) at 8:30 AM ET tomorrow. It is expected to show a slight upward revision to last month's preliminary reading of a 2.9% annual rate of growth. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the benchmark measurement of economic growth. Current forecasts call for an increase of 3.0%, meaning that there was a tad more economic activity during the third quarter than previously thought. This would be bad news for the bond market and mortgage rates because strengthening economic growth makes bonds less appealing to investors that hurts bond prices and mortgage rates. Unless we see a much larger increase or a downward revision, I suspect this release will have a minimal impact on mortgage rates. It is the second of the three monthly updates and analysts are looking more towards the current quarter?s activity than what happened during late summer and early fall.

November's Consumer Confidence Index (CCI) will also be posted tomorrow morning, but at 10:00 AM ET. This Conference Board index helps us track consumer willingness to spend. If a consumer's confidence in their own financial and employment situation is strong, analysts believe that they are more apt to make larger purchases, fueling economic growth. This is important because consumer spending makes up over two-thirds of the U.S. economy and makes long-term securities such as mortgage-related bonds less attractive to investors. Analysts are expecting to see an increase in confidence from last month's level, meaning surveyed consumers were more optimistic about their own financial situations this month than they were last month. This rise is likely related to the post-election stock market gains. A weaker reading than the 100.5 that is expected would be good news for mortgage rates, while a stronger reading could push mortgage rates higher tomorrow.

Overall, I am expecting to see plenty of movement in mortgage rates this week, particularly the latter days. I would not be surprised to see bonds recover some recent losses early in the week (as with this morning?s gains), but I strongly recommend maintaining contact with your mortgage professional if still floating an interest rate. As the week progresses, it would be wise to watch the markets very closely because the later in the week we go, the more likely we are to see bigger moves in the markets.

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...

 

[Tamalewagon]

Tuesdays bond market has opened in negative territory following stronger than expected economic data. The stock markets do not seem too impressed with the news though as the Dow is up only 3 points while the Nasdaq has gained 11 points. The bond market is currently down 7/32 (2.33%), but due to strength late yesterday we still should see a slight improvement in mortgage rates if comparing to Mondays early pricing. Many lenders made downward changes to rates intraday yesterday, so if your lender was not one of them you may see a larger improvement this morning.

The first revision to the 3rd Quarter Gross Domestic Product (GDP) was released at 8:30 AM ET today, revealing a 3.2% annual rate of growth. This was an increase from the preliminary reading of 2.9% and was higher than what forecasts were calling for (3.0%). It means that economic growth was stronger during the July through September months than many had thought. Since bonds tend to thrive in weaker economic conditions, this is bad news for mortgage rates.

Novembers Consumer Confidence Index (CCI) was also posted this morning. The Conference Board announced at 10:00 AM ET that their CCI stood at 107.1 this month, greatly exceeding expectations. It was also the highest reading since July 2007. Analysts were expecting to see a reading of only 100.5. The spike indicates that consumers are much more optimistic about their own financial and employment situations than they were last month. Because rising confidence usually translates into stronger levels of consumer spending that fuels economic growth, this was also bad news for bonds and mortgage rates.

Tomorrow has three reports that we will be watching. The first is the ADP Employment report at 8:15 AM ET, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs of the company's clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week's calendar. Analysts are expecting to see 160,000 new private-sector payrolls for November.

Octobers Personal Income and Outlays data is the second report of the day, coming at 8:30 AM ET. This data measures consumers ability to spend and their current spending habits. It is important because consumer spending is such a large part of the U.S. economy. It is expected to show that income rose 0.4% and that spending increased 0.5%. Weaker than expected readings would mean consumers had less money to spend and were spending less than thought. That would be favorable news for bonds and could lead to improvements in mortgage rates tomorrow morning.

Lastly, the Federal Reserve will release their Beige Book at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions by Fed region. That information is relied upon heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any noticeable changes from the last update. More times than not though, this report will not influence the markets enough to cause intra-day changes to mortgage rates, but the potential to do so does exist.

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...

 

[Tamalewagon]

With home values increasing and set to increase even more with the outlook of a more solid economy, those of you with FHA loans have a golden opportunity to refinance into 30 year fixed rates without PMI. Even though rates have climbed a little, there is a very good chance you can save hundreds per month by getting rid of your PMI.

Those of you with adjustable rate mortgages, you too have a golden opportunity to refinance into a 30 year fixed rate for added security. With the FED set to raise interest rates and a more solid economy, rates will most likely continue to climb for the foreseeable future. The majority of lenders and economists agree that we will see increased home values and higher but still historically low interest rates.

Some additional big news is that the loan limits per county is going to increase January 1st, 2017. The conforming loan limits are climbing from $417000 to $424100 nationwide. Not a huge jump but those of you that are on the cusp will be able to refinance or purchase with conforming rates. The conforming jumbo loan limits are also increasing. Call me for your specific county.

If your mortgage is adjustable, FHA, have too much consumer debt or currently have a rate higher than 4.325%, I want to talk with you about your future savings and lowering your payment.

My contact information is below.

 

[Tamalewagon]

Nov. jobs report comments from Doug Duncan, Fannie Mae Chief Economist
Keep in mind...If/when the FED raises their rate, there is a very strong possibility of mortgage rates being negatively affected yet again.


Fannie Mae?Friday, December 2, 2016
.

?Today?s Labor Department employment report was unremarkable, suggesting a small Federal Reserve rate hike will occur ? as the market expected ? in December. Some attention will be paid to the drop in the unemployment rate to 4.6 percent, but that is driven by the combination of jobs added and a decline in workforce participation, the latter of which was disappointing. The income growth number dropped back, thus easing Fed concerns about compensation as a driver of inflation through tight labor markets. Professional services showed broad-based employment growth, and state government employment made a healthy contribution. Manufacturing employment, currently featured in many headlines, showed a fourth consecutive month of minor employment declines, but housing more than offset that with a third consecutive month of healthy job growth. Housing supply growth continues to grind upward adding to economic growth. In sum, there?s no reason to believe that the pace of future rate hikes will pick up based on this release.?

 

[Tamalewagon]

This week brings us the release of only three monthly or quarterly economic reports that have the potential to influence mortgage pricing and none of them are considered highly important. That should be a relief compared to the past couple weeks as we have seen a great deal of volatility in the bond and mortgage markets over that time. There is nothing of importance set for tomorrow except maybe a reaction to Italy?s referendum vote. It appears to be a positive for bonds at the moment, but that is a fluid situation that will become more of a topic of conversation in the coming days and weeks.

The first event of the week will come early Tuesday morning when revised 3rd Quarter Productivity numbers are posted. This index is expected to show a small upward 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's the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate in productivity of 3.3%, up from the previous estimate of 3.1%. The higher the reading, the better the news for the bond market. Although, this report generally does not have a noticeable impact on mortgage pricing, so it will take a wide variance to draw much attention.

October's Factory Orders report will also be released Tuesday morning, but at 10:00 AM ET. This Commerce Department report is similar to the Durable Goods Orders report that was released the week before last, except this one includes manufacturing orders for both durable and non-durable goods. This release usually doesn't have a significant influence on bond trading since a good portion of the data has previously been made public. Analysts are expecting to see a 2.5% increase in new orders. The weaker the number, the better the news for bond prices and mortgage rates because it would signal softer than expected manufacturing sector activity.

The final report of the week is the release of December's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Friday's release is expected to show a reading of 94.3, which would be an increase from last month's final reading of 93.8. A large decline in confidence would be considered good news for the bond market and mortgage rates.

Overall, I believe we may see a less active week for mortgage rates compared to the last couple weeks. However, that doesn?t mean we won?t see any movement in rates the next few days. Tuesday is the busiest day with two of the three releases, but neither of them are considered to be highly important to the markets. We also will be watching political issues in Italy as it could affect the global markets. It is feared that the No vote on their referendum may put pressure on their banking system and government borrowing ability, which could create volatility in the international markets and global economy. In other words, despite the lack of important data set for release, it is still recommended that you maintain contact with your mortgage professional as the markets can get volatile at any time and without notice.

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... Lock if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Mondays bond market has opened well in negative territory to start the week with another increase in mortgage rates. The stock markets are showing sizable gains, driving the Dow up 98 points and the Nasdaq up 56 points. The bond market is currently down 15/32 (2.44%), which should push this morning?s mortgage rates higher by .250 - .375 of a discount point over Fridays morning pricing.

There is nothing set for release today that is likely to affect rates. The rest of the week brings us only three monthly or quarterly economic reports that have the potential to influence mortgage pricing and none of them are considered highly important. Still, we can expect to see the recent volatility and pressure in bonds continue despite a heavy economic calendar.

Tomorrow has two of the week?s three reports, starting with revised 3rd Quarter Productivity numbers are posted at 8:30 AM ET. This index is expected to show a small upward 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 is not necessarily bad for the bond market. It's the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate in productivity of 3.3%, up from the previous estimate of 3.1%. The higher the reading, the better the news for the bond market. Although, this report generally does not have a noticeable impact on mortgage pricing, so it will take a wide variance to draw much attention.

Octobers Factory Orders report will also be released tomorrow morning, but at 10:00 AM ET. This Commerce Department report is similar to the Durable Goods Orders report that was released the week before last, except this one includes manufacturing orders for both durable and non-durable goods. This release usually doesn't have a significant influence on bond trading since a good portion of the data has previously been made public. Analysts are expecting to see a 2.5% increase in new orders. The weaker the number, the better the news for bond prices and mortgage rates because it would signal softer than expected manufacturing sector activity.

Overall, I believe we may see a less active week for mortgage rates compared to the last couple weeks. However, that does not mean we will not see any movement in rates the next few days. Tomorrow is the busiest day with two of the three releases, but neither of them are considered to be highly important to the markets. We also will be watching political issues in Italy as it could affect the global markets. It is feared that the No vote on their referendum may put pressure on their banking system and government borrowing ability, which could create volatility in the international markets and global economy. In other words, despite the lack of important data set for release, it is still recommended that you maintain contact with your mortgage professional as the markets can get volatile at any time and without notice (as we have seen today).

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... Lock if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Tuesdays bond market has opened up slightly, extending yesterdays late strength. The stock markets are mixed with the Dow down 17 points and the Nasdaq up 2 points. The bond market is currently up 3/32 (2.39%), which with yesterday?s late gains should improve this morning?s mortgage rates by approximately .125 of a discount point. If your lender improved rates intraday yesterday, you may not see another improvement this morning.

Revised 3rd Quarter Productivity numbers kicked off this weeks economic calendar at 8:30 AM ET. It showed a 3.1% increase in worker output, matching the initial estimate. Analysts were expecting to see a 3.3% increase, so the variance was pretty minimal. What is worth noting is the 0.7% rise in a secondary reading that tracks labor costs when forecasts were calling for only a 0.2% increase. That raises some concern about wage growth that could fuel inflationary concerns in the bond market. Still, this particular report is not considered to be highly important, meaning it has had little influence in this mornings mortgage pricing.

Octobers Factory Orders report was released at 10:00 AM ET this morning by the Commerce Department. They announced a 2.7% increase in new durable and non-durable goods orders at U.S. factories. It was slightly stronger than the 2.5% that was expected, but not enough of a difference to cause much concern in this morning?s trading. We will consider the data negative for bonds because it shows a stronger manufacturing sector. However, it has not come into play in this morning?s mortgage rates.

Tomorrow does not have any relevant economic data set for release. I would not be surprised to see a fairly calm day in bonds and mortgage rates as long as stocks are not showing sizable gains or losses. However, things can get volatile at any time. Therefore, please keep an eye on the markets 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... Lock if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Wednesdays bond market has opened in positive territory with little to drive trading. Even stocks are not of much help with the major indexes mixed. The Dow is currently up 17 points while the Nasdaq has lost 19 points. The bond market is currently up 9/32 (2.35%), which should improve this mornings mortgage rates by approximately .125 of a discount point.

There is no relevant economic data being posted today. I suspect we will see a relatively quiet day in bonds and mortgage rates unless stocks make a noticeable move higher or lower. If the major stock indexes rise, we can expect to see bonds weaken and mortgage rates possibly revise higher. If stocks move lower, bond strength may lead to a slight improvement in rates later today.

Tomorrow also doesn?t have any important data but does bring us the release of last weeks unemployment figures. They are expected to show 255,000 initial claims for unemployment benefits were filed last week, down from the previous week?s 268,000 new claims. Falling initial filings indicates strength in the employment sector. Therefore, the bond market prefers to see rising claims. However, because this is only a weekly update, it usually takes a significant variance from forecasts for the report to directly influence mortgage pricing.

Also in focus tomorrow will be the European Central Banks (ECB) monetary policy meeting. This is similar to our FOMC meetings here. The ECB is not expected to raise key interest rates tomorrow. What is being widely debated is whether they will extend their current stimulus program of buying bonds each month. There is a general consensus that they will continue the purchases, but there is question whether they will start scaling back the size of the purchases. Reducing the amount of the program will signal confidence in the Eurozone economy and will probably pressure bonds here. If they continue with the current rate of buying, I believe we can expect to see the bond market react favorably here, possibly leading to an improvement in mortgage rates tomorrow.

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... Lock if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Thursdays bond market has opened in negative territory this morning due to financial news from overseas. Stocks aren?t having much of a reaction to that news with the Dow up 12 points and the Nasdaq up 1 point. The bond market is currently down 17/32 (2.40%), which should push this mornings mortgage rates higher by approximately .125 of a discount point. A little strength in bonds late yesterday is softening the impact on this mornings pricing. If your lender improved rates intraday yesterday, you likely will see a larger increase in this mornings pricing as that improvement gets reversed also.

Today had only one piece of economic data that was relevant to mortgage rates. At 8:30 AM ET we got last weeks unemployment figures. They showed that 258,000 new claims for unemployment benefits were filed last week. This was a bit higher than the 255,000 that was expected but still a decline from the previous week?s 268,000 initial filings. Declining claims is bad news for bonds and mortgage rates because it points to a strengthening employment sector. However, last weeks number was slightly higher than forecasts. That means we can consider the news neutral towards this morning?s mortgage pricing.

What is really driving this morning?s bond selling was word from the European Central Bank (ECB) that they will extend their stimulus program of buying bonds, but at a slower pace (from 80 billion euros to 60 billion). This tapering announcement indicates the Eurozone central bankers have confidence in their economic growth. That helps fuel optimism about global economic activity, making bonds less attractive to investors. Hence, this mornings bond selling and upward move in mortgage rates.

Tomorrow morning has one economic report that we will be watching. That will be December's preliminary reading to the University of Michigans Index of Consumer Sentiment just before 10:00 AM ET tomorrow morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are with their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Tomorrows release is expected to show a reading of 94.3, which would be an increase from last months final reading of 93.8. A large decline in confidence would be considered good news for the bond market and 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... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Fridays bond market has opened down slightly, extending yesterdays late weakness. The stock markets are showing modest gains of 12 points in the Dow and 18 points in the Nasdaq. The bond market is currently down 2/32 (2.41%), which should push this morning?s mortgage rates higher by slightly less than .125 of a discount point.

Todays only relevant economic data was Decembers preliminary reading to the University of Michigan's Index of Consumer Sentiment just before 10:00 AM ET. It came in at 98.0, well above forecasts of 94.3 and a sizable increase from November?s 93.8. This means that surveyed consumers felt much better about their own financial and employment situations than many had thought. Because high levels of sentiment usually translates into stronger consumer spending, this is bad news for bonds and mortgage rates. Fortunately, the data did not draw too much attention, preventing a larger impact on today?s mortgage pricing.

Next week looks like it is going to be a pretty active one for the financial and mortgage markets. We have a handful or economic reports, including two key inflation indexes and a very important measure of consumer spending. In addition to the data, there are also a couple of Treasury auctions scheduled along with the last FOMC meeting of the year that is expected to bring an increase in short-term rates from the Fed.

There is no important economic data scheduled for release Monday, but the first of the weeks two Treasury auctions that may influence mortgage rates is being held. 10-year Treasury Notes will be sold Monday, although we likely will not see it affect rates until early afternoon trading when results will be posted. Look for details on it, the FOMC meeting and the rest of the week?s activities 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

 

[Tamalewagon]

Tuesdays bond market has opened up slightly even though stocks are showing noticeable gains. The Dow is currently up 103 points while the Nasdaq has gained 51 points. The bond market is currently up 2/32 (2.47%), but strength late yesterday should cause an improvement in this mornings rates of approximately .125 of a discount point. This is assuming your lender did not make an intraday improvement yesterday.

There again is no relevant economic data scheduled for release today. We do have the 30-year Bond auction to watch this afternoon though. Yesterdays 10-year Note sale did not go well with several benchmarks we use to gauge investor demand showing weak levels of interest, particularly from overseas buyers. That prevents us from getting too optimistic about todays sale. However, we still saw bonds improve late yesterday despite the weak auction results, so it is possible today?s sale will not influence rates either. Results will be posted at 1:00 PM ET, meaning any reaction will come during early afternoon trading.

Tomorrow is going to be quite interesting and it is safe to safe it will be an active day in the markets also. The day starts with three morning economic releases, two of which are highly important. The first of the batch is November's Retail Sales report at 8:30 AM ET. This report will give us a key measurement of consumer spending by tracking sales at retail level establishments. This data is highly important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rapidly rising consumer spending raises the possibility of seeing solid economic growth. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, a large increase in retail sales will likely drive bond prices lower and mortgage rates higher tomorrow morning. Current forecasts are calling for an increase of 0.3% in November's sales.

The second relevant report will be Novembers Producer Price Index (PPI), also early tomorrow morning. It shows inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If tomorrow's release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively. That would drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market could respond by pushing mortgage rates slightly lower. Analysts are expecting a 0.1% increase in the overall index and a 0.2% rise in the core data.

Novembers Industrial Production report will be posted at 9:15 AM ET. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts are calling for a 0.1% decline in output, indicating manufacturing softness. A larger than expected decline would be good news for bonds, while a stronger reading would show manufacturing strength and be considered bad news for rates. It is worth noting that the two early reports will draw more attention than this one will.

If those three reports were not enough to create some movement in the markets, the afternoon events surely will. There are three significant FOMC events later in the day that can be highly influential on the financial and mortgage markets. The two-day FOMC meeting that began today will adjourn at 2:00 PM ET tomorrow. The general consensus expects Fed Chair Janet Yellen and friends to make a quarter point upward bump to key short-term interest rates. This would be the first move since this time last year and only the second in the past 10+ years. At the same time their post-meeting statement is made, they will also release revised economic projections. They will give us the Feds predictions for unemployment, inflation and GDP growth. Any noticeable changes can heavily affect bond trading and mortgage rates. They will be followed by a press conference with Chair Yellen at 2:30 PM ET. Expect a very active afternoon in the financial and mortgage markets tomorrow as a result of these events.

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...

 

[Kachina26]

Scott,

Thanks so much for all you did. I've done several finances/re-finances over the years and this is the best experience by far.

 

[Tamalewagon]

Wednesday?s bond market has opened in positive territory following mixed economic data. The stock markets are relatively calm with the Dow down 39 points and the Nasdaq unchanged. The bond market is currently up 12/32 (2.43%), which should improve this morning?s mortgage rates by approximately .125 of a discount point.

Yesterday?s 30-year Bond auction went much better than Monday?s 10-year Note sale did. The benchmarks showed a pretty strong level of interest in the securities. Unfortunately, we did not see much of a reaction to the results in Tuesday?s afternoon mortgage pricing.

The first of this morning?s three relevant economic reports was November's Retail Sales report at 8:30 AM ET. The Commerce announced a 0.1% increase in retail level sales last month, falling short of the 0.3% that was expected. Even a secondary reading that excludes more volatile and costly auto sales was weaker than forecasts (+0.2% vs +0.4%). Those readings indicate that consumers spent less last month than many had thought. Since that is a sign of economic weakness, we can consider the data good news for bonds and mortgage rates.

November's Producer Price Index (PPI) was also posted at 8:30 AM ET. It showed a 0.4% rise in the overall reading and a 0.4% increase in the more important core data that excludes volatile food and energy costs. Both readings exceeded forecasts of up 0.1% and 0.2% respectively. This means inflationary pressures at the producer level of the economy was stronger than thought, making the news negative for bonds and mortgage pricing. That is because rising inflation makes long-term securities less appealing to investors and increases the possibility of the Fed taking more aggressive action towards raising key rates.

The third and final report of the morning was November's Industrial Production at 9:15 AM ET. This report showed a 0.4% decline in output at U.S. factories, mines and utilities. Forecasts were calling for a 0.1% decline in production, so we can consider this favorable news also. However, the other two reports are considered to be more important to bonds than this data is.

Today?s events have not concluded. There are three significant FOMC events this afternoon that can be highly influential on the financial and mortgage markets. The two-day FOMC meeting adjourns at 2:00 PM ET. This is where Fed Chair Janet Yellen and friends are expected to make a quarter point upward bump to key short-term interest rates. This would be the first move since this time last year and only the second in the past 10+ years. What will be of greater interest will be any indication of future moves. How many next year and how soon will the next increase likely come.

At the same time of the adjournment and their post-meeting statement is made, they will also release revised economic projections. They will give us the Fed?s predictions for unemployment, inflation and GDP growth. Any noticeable changes can heavily affect bond trading and mortgage rates. Then we have a press conference with Fed Chair Yellen at 2:30 PM ET. Expect a very active afternoon in the financial and mortgage markets tomorrow as a result of these events.

Look for an update to this report shortly after the markets have had an opportunity to react to the afternoon events. There is relevant economic data set for release tomorrow, but it will be addressed in this afternoon?s revised commentary.

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...

 

[Tamalewagon]

As we expected...Rates are rising due to the Fed's decision today.

WEDNESDAY AFTERNOON UPDATE:
As was widely expected, the FOMC meeting adjourned with an announcement of a quarter point increase to key short-term interest rates. We did get some surprises though and the bond market has not responded well to them. The biggest and most impactful is that the Fed is estimating 3 or more rate hikes next year when the previous estimate was 1 or 2. That means the Fed is confident in the U.S. economy continuing to grow, making bonds less attractive. This is especially true when the Fed strongly believes that inflation will continue to strengthen. Their revised economic projections showed a slight upward revision to the GDP (1.8% to 1.9%), a downward tick in the unemployment rate (4.8% to 4.7%) and no change to core inflation (1.7%).

Overall, the news has not been taken well in the stock or bond markets. The Dow is currently down 152 points while the Nasdaq is down 32 points as the rate increases are expected to restrict future economic growth and corporate earnings. The bond market is currently down 15/32 (2.52%) since the additional rate increases means the Fed feels that the economy will continue to strengthen and be able to absorb those moves. The net impact on mortgage rates is an intraday upward revision of approximately .250 of a discount at the time of this update. However, if bonds continue to slide, another increase before the end of the day is quite possible.

The first of this morning?s three relevant economic reports was November's Retail Sales report at 8:30 AM ET. The Commerce announced a 0.1% increase in retail level sales last month, falling short of the 0.3% that was expected. Even a secondary reading that excludes more volatile and costly auto sales was weaker than forecasts (+0.2% vs +0.4%). Those readings indicate that consumers spent less last month than many had thought. Since that is a sign of economic weakness, we can consider the data good news for bonds and mortgage rates.

November's Producer Price Index (PPI) was also posted at 8:30 AM ET. It showed a 0.4% rise in the overall reading and a 0.4% increase in the more important core data that excludes volatile food and energy costs. Both readings exceeded forecasts of up 0.1% and 0.2% respectively. This means inflationary pressures at the producer level of the economy was stronger than thought, making the news negative for bonds and mortgage pricing. That is because rising inflation makes long-term securities less appealing to investors and increases the possibility of the Fed taking more aggressive action towards raising key rates.

The third and final report of the morning was November's Industrial Production at 9:15 AM ET. This report showed a 0.4% decline in output at U.S. factories, mines and utilities. Forecasts were calling for a 0.1% decline in production, so we can consider this favorable news also. However, the other two reports are considered to be more important to bonds than this data is.

Tomorrow has one minor and one important economic report scheduled. The important monthly report will be November's Consumer Price Index (CPI) at 8:30 AM ET. It is the sister release to today's Producer Price Index, except it tracks inflationary pressures at the important consumer level of the economy. It is expected to show a 0.2% rise in both the overall and core data readings. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond's future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weak readings would be favorable for the bond market and mortgage shoppers.

Last week?s unemployment figures will also be released at 8:30 AM ET tomorrow. They are expected to show that 256,000 new claims for unemployment benefits were filed last week, down from the previous week?s 258,000. Rising initial claims are a sign of employment sector weakness, so the larger the number of claims, the better the news it is for mortgage rates. Although, because this is only a weekly reading we usually need to see a significant variance from forecasts for it to impact 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...

 

[pronstar]

Tamalewagon - at what point do you feel rising rates will begin to noticeably push-down housing prices?

 

[Tamalewagon]

Tamalewagon - at what point do you feel rising rates will begin to noticeably push-down housing prices?

That's an interesting question. If there are a lot of buyers and sellers on the fence, you may actually see the market spark a little. It may actually motivate more people to start listing and buyers to start buying before properties become out of reach. It will be interesting to watch over the next 2-6 months. Every market beats to their own drum too. What happens in San Diego may not happen in Vegas, Phoenix, LA etc.

 

[thetub]

Tamalewagon - at what point do you feel rising rates will begin to noticeably push-down housing prices?

I would think a full point?

lets say 3.8 to 4.8

 

[Tamalewagon]

Thursdays bond market has opened in negative territory as yesterdays heavy selling extends into todays early trading. The stock markets are showing noticeable gains with the Dow up 100 points and the Nasdaq up 29 points. The bond market has improved from earlier levels but is currently down 2/32 (2.57%), which will not help get back any of yesterdays spike in mortgage rates. There were widespread post-FOMC upward revisions to mortgage rates yesterday. Some lenders issued multiple revisions during the last two hours of the day. How much of an increase you will see this morning all depends on how much of a change was made yesterday afternoon. The net difference between Wednesday?s morning pricing and this morning?s early rates should be in the neighborhood of .750 of a discount point.

This mornings economic data did not bring much in terms of a surprise. The more important of the two 8:30 AM ET releases was November's Consumer Price Index (CPI). The overall CPI reading rose 0.2% as did the more important core data that excludes more volatile food and energy prices. Both readings pegged forecasts, so the data has not influenced this morning?s bond trading or mortgage pricing.

Also posted early this morning was last weeks unemployment figures that showed 254,000 new claims for unemployment benefits were made. This was a little lower than the 256,000 that was expected and down from the previous week?s 258,000. Declining initial claims is a sign of strength in the employment sector, so we can technically consider the data bad news for mortgage rates. However, this is only a weekly snapshot so its impact on the markets and mortgage rates has been minimal.

Tomorrows only relevant economic data will be November's Housing Starts at 8:30 AM ET. This data isn't known to be highly influential on bonds or mortgage pricing, but it does give us an indication of housing sector strength by tracking new home groundbreakings. Analysts are expecting to see a sizable drop in new home starts, indicating weakness in the new home portion of the housing sector. Slowing starts would be favorable for the bond market, although a wide variance is likely needed for the data to cause noticeable movement in the markets or mortgage rates tomorrow.

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...

 

[Tamalewagon]

Fridays bond market has opened in positive territory with todays only relevant data showing favorable results. Stocks are helping bonds by showing only minor gains of 46 points in the Dow and 5 points in the Nasdaq. The bond market is currently up 5/32 (2.58%), but due to weakness late yesterday we still should see an increase in this morning?s mortgage rates of approximately .125 of a discount point if comparing to yesterday?s morning pricing.

Todays only semi-relevant economic data was Novembers Housing Starts at 8:30 AM ET. It revealed an 18.7% decline in new home groundbreakings, indicating weakness in the new home portion of the housing sector. This was a much larger decline than was expected and a sizable drop from October?s starts, making the data good news for bonds and mortgage rates.

Next week had a handful of economic reports scheduled to be released but only one of this is thought of as important. They all come during the middle and latter days, so we can expect to see the busiest days as the week progresses. Fed Chair Janet Yellen does have a speaking engagement in Baltimore Monday afternoon and the markets always listen closely when Fed members are speaking. This means we have some to watch for although it is not too concerning.

It has been a wild week for mortgage rates, one that I think we are happy is coming to an end. It is nice to close on a positive note (assuming this morning?s gains hold), but I think this may be where the bond market regroups. The recent spike in bond yields and mortgage rates has been a bit of an overkill in my opinion. We still need to watch for year-end positioning as traders book profits or losses from this year?s volatility. Still, this may be a good opportunity to recover a small part of the post-election increases in mortgage pricing. However, the window may be short-lived so proceed cautiously and keep an eye on the markets if floating an interest rate and closing soon.

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...

 

[530RL]

Tamalewagon - at what point do you feel rising rates will begin to noticeably push-down housing prices?

That's an interesting question. If there are a lot of buyers and sellers on the fence, you may actually see the market spark a little. It may actually motivate more people to start listing and buyers to start buying before properties become out of reach. It will be interesting to watch over the next 2-6 months. Every market beats to their own drum too. What happens in San Diego may not happen in Vegas, Phoenix, LA etc.

I would think a full point?

lets say 3.8 to 4.8

Let's look at the question purely from a data standpoint;

If one has $2,000 a month to spend on P&I and they want a 30 year fixed mortgage, the following interest rates yield roughy the following amounts of money available to be borrowed by the homebuyer.

3.5% $445,390

4.0% $418,922

4.5% $394,722

5.0% $372,563

5.5% $352,243

So a 200 basis point move in 30 year fixed rates would yield a loss of purchasing power of about 93k or about 21% less purchasing power than a 3.5% fixed mortgage.

If one wants to keep the loan amount at $445,390, the following payments would be roughly necessary at the following interest rates.

3.5% $2,000

4.0% $2,126

4.5% $2,257

5.0% $2,391

5.5% $2,529

So a 200 basis point move in interest rates costs the buyer about 26% more in payments to borrow the same amount.

I have no idea when upward movement will affect the home market but historically it affects volume first, and pricing second. It also seems right now that the market and the analysts are betting that wage increases will be able to outpace the additional cost of borrowing.

The other thing to watch is if the new administration pulls the government backing from Fannie and Freddie, there could be an increase in mortgage rates with an expansion in the risk premium as the implied guarantee goes away.