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There are five pieces of economic news that may affect mortgage rates this week. All of the relevant news will be released over three days. I expect the stock markets to again be a fairly significant influence on bonds the other days. If we see sizable stock losses, funds may shift into bonds and lead to lower rates. However, stock gains could push bond prices lo wer and mortgage rates higher those days.

November's manufacturing index from the Institute for Supply Management (ISM) will kick off the week's data at 10:00 AM ET tomorrow. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a small decline in sentiment from October to November. October's reading was previously announced as 50.9. A weaker reading than the expected 50.5 would be good news for the bond market and mortgage rates. This release will be watched closely because recent declines have brought it very close to the important benchmark of 50.0. A reading above 50 means that more surveyed trade executives felt business improved than those who felt it had worsened. A drop below 50 indicates that more felt business had worsened. That is a recessionary sign and could lead to a sizable rally in bonds and mortgage pricing.

The next piece of data that we need to be concerned with comes Wednesday morning with the release of the revised 3rd Quarter Productivity report. This index is expected to show an 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 is the conditions around economic growth, such as inflation that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 5.5%, up from the previous estimate of 4.9%.

The second report of the day is October's Factory Orders. This report is similar to last week's Durable Goods Orders release except that this one includes orders for both durable and non-durable goods. This data usually isn't a major influence on bond trading, but we may see it cause some movement in mortgage rates if it varies greatly from forec asts. Analysts are expecting to see an increase of approximately 0.4%.



Friday also brings us the release of two reports, one of which is arguably the most important monthly report we see. The Labor Department will post November's Employment report early Friday morning. The report is comprised of many statistics and readings, but the most important ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for a slight upward change in the unemployment rate to 4.8%, new payrolls up approximately 75,000 and an increase of 0.3% in average earnings. An ideal scenario for mortgage shoppers would be a higher unemployment rate than 4.8%, a much smaller increase in jobs than is expected and no change in the earnings portion.

The fifth and final report of the week is December's preliminary reading to the University of Michigan's Index of Consumer Sentiment 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. However, with the employment figures out before this data, I don't expect it to affect mortgage rates much. It is expected to show a reading of 75.5, which would be a small decline from last month's final reading.

Overall, the most important day of the week is Friday with the employment figures being released, but we may also see movement in rates Monday and Wednesday. The remaining days could be fairly quiet, depending on stock market gains or losses. Friday's data could cause a significant change in rates, but if it reveals stronger than expected results we may see rates spike higher Friday morning. Ahead of the report, we may see pressure in bonds as investors prepare for its release. Accordingly, I am holding the lock recommendations for short and intermediate-term periods.

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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2007

Monday's bond market has opened in positive territory following another weak morning in stocks. The Dow is currently down 167 points while the Nasdaq has lost 35 points. The bond market is currently up 10/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.

There is no relevant economic news scheduled for release today. The rest of this holiday-shortened week brings us the release of three factual economic releases. However, none of them are likely to affect mortgage rates much. The bond market is expected to close early Wednesday and Friday and be closed the entire day Thursday in observance of the Thanksgiving Day holiday. In addition, I expect to see light trading in the financial markets most of the time that the markets are open.

The first report of the week is tomorrow's release of October's Housing Starts. This data gives us an indication of housing sector strength, but usually does not have a noticeably impact on mortgage rates. I don't expect this month's version to be any different unless it varies greatly from analysts forecast. It is expected to show a decline in starts of new homes.

Also tomorrow is the afternoon release of the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher Tuesday afternoon. However, if they indicate a likelihood of another rate cut in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.

Overall, I expect see bond trading get lighter as the week goes on as more traders head home for the holiday. If we get any significant surprises or unexpected news this week, bond prices will move more than usual due to the thin trading. But, if we see no surprises, it should be a fairly quiet week for mortgage rates. With the little likelihood of much improvement in rates, I am holding the Lock recommendations.

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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

November 13, 2007

Tuesday's bond market has opened in negative territory following early stock gains. The stock markets are showing early strength with the Dow up 130 points and the Nasdaq up 35 points. The bond market is currently down 8/32, but we will likely see little change from Friday's rates due to strength in bonds late Friday.

Tomorrow morning kicks off this week's relevant economic news with the release of October's Producer Price Index (PPI) and Retail Sales figures. The PPI measures 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.

If it reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and should drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should thrive and mortgage rates should fall. Current forecasts are calling for increases of 0.2% in both the overall index core data readings.

October's Retail Sales report will also be released morning. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. If this report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall, assuming the PPI doesn't show any significant surprises. Current forecasts are calling for an increase in sales of approximately 0.2%.

We will likely see a fair amount of volatility in stocks, bonds and mortgage rates tomorrow, so please proceed cautiously 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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Market Commentary for 11/9/07

Friday's bond market has opened in positive territory due to weaker than expected economic data and another weak opening for stocks. The stocks markets are showing sizable losses again with the Dow currently down 128 points and the Nasdaq down 46 points. The bond market is currently up 7/32, which will likely improve this morning's mortgage rates slightly.
Today's first piece of economic news revealed that the U.S. trade deficit fell to $56.5 billion in September. This was lower than expected, but since the data is not considered to be a major influence on the bond or mortgage markets, its results have not affected today's mortgage rates.

November's preliminary reading of the University of Michigan Index of Consumer Sentiment was posted late this morning. It showed a reading of 75.0, which was well below forecasts of 80.0. This indicates that consumers were less optimistic about their own financial situations than was expected. That is goods news for bonds and mortgage rates because lower levels of sentiment usually translates into weaker consumer spending.

Next week brings us the release of several important pieces of economic news, including Retail Sales data and two important inflation indexes. There is no relevant data scheduled for release until Wednesday morning, so the stock markets may be the bigg est influence on bonds the first part of the week. Look for more details on next week's events in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

October 4th, 2007

OCTOBER 30th, 2007

Tuesday's bond market has opened flat despite weaker than expected economic news and early stock losses. The stock markets are in negative territory with the Dow down 45 points and the Nasdaq down 3 points. The bond market is currently nearly unchanged from yesterday's closing levels, which should keep this morning's mortgage rates unchanged.

The Confe rence Board said this morning that their Consumer Confidence Index (CCI) for October fell to 95.6. This was much lower than was expected and indicates that consumers felt much less confident in their own financial situations than many had thought. This is good news for bonds and mortgage rates because it means that consumer spending is likely to slow in the near future. However, with the importance of tomorrow's economic data and FOMC meeting, the reaction to this news has been rather subdued.

Tomorrow morning brings us the release of the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP). The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. and is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Tomorrow's release is the first and usually has the biggest impact on the mark ets. Current forecasts call for an increase of approximately 3.1% in the GDP. I think we need to see a smaller increase for the bond market to rally and mortgage rates to drop. Just matching the estimate will probably bring a stock market rally and could cause mortgage rates to rise.

The second report of the day will be the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.9%. A smaller than expected increase would be good news for bonds and mortgage rates.

The FOMC meeting is a two-day meeting that began today and will adjourn tomorrow afternoon. It is expected to bring another rate cut to key short-term interest rates. Assuming this does happen, traders will be looking at the post-meeting statement for any indication of the Fed's next move. While it is widely expected that the Fed will cuts rates at this meeting, there is a lot of different opinions of when the following cut will come, if at all. The meeting will adjourn at 2:00 PMET, so look for quite a bit of volatility in the markets and possibly mortgage pricing during afternoon hours.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2007

October 26, 2007

Friday's bond market has opened in negative territory due to early stock strength. The stock markets are showing gains, with the Dow currently up 57 points while the Nasdaq has gained 39 points. The bond market is currently down 2/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

The only relevant economic news of the day was posted late this morning when the University of Michigan posted their revised Index of Consumer Sentiment for October. They announced a reading of 80.9, which was a downward revision and below the forecasted reading 82.0. This means that surveyed consumers were less confident in their own financial situations than was thought. This is good news for bonds and mortgage rates because waning confidence usually translates into weaker consumer spending.

With no other relevant economic news scheduled for release today and stocks looking like they will hold early gains, I don't see much likelihood that we will see bonds rally today. Next week brings us plenty of economic news, so I am holding the current lock/float recommendations for the time being.

Next week is actually packed with economic news. There is nothing on tap for Monday, but there is at least one highly important piece of news scheduled for release every other day of the w eek, with multiple releases due on several days. It is going to be a very interesting week for the financial markets and mortgage rates, so we need to proceed cautiously. Look for more details on next week's event sin Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2007

Wednesday, October 24th 2007

Wednesday's bond market has opened in positive territory following early stock weakness. The stock markets are showing sizable losses that are likely to get larger before the end of the day. The Dow is currently down 89 points while the Nasdaq has lost 42 points. The bond market is currently up 15/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount point.

The National Association of Realtors reported this morning that home resales fell over 8% last month. This was the largest monthly decline on record and indicates that the housing sector is still rapidly weakening. This basically is good news because soft housing numbers are thought to be a drag on overall economic activity. It generally does not influence bond trading, but due to the size of the drop, today's news has helped boost bond prices.

Tomorrow morning, the Commerce Department will post Durable Goods Orders for September. This is the week's most important data. It gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. Analysts are currently calling for an increase in new orders of approximately 1.5%. If we see a larger than expected rise in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good ne ws for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast.

Also tomorrow are weekly unemployment figures from the Labor Department and New Home Sales from the Commerce Department. Neither are considered to be very important since the unemployment numbers track only a week's worth of claims and the home sales report covers only approximately 15% of all home sales in the U.S. The Durable Goods Orders data will be the biggest influence on bonds and mortgage rates tomorrow morning.

The Treasury auction is also tomorrow, when 5-year Notes will be sold. This will help gauge investor interest in bonds and could lead to a bond rally or selling. Results of these sales are posted at 1:00 PM ET, so any impact on trading and mortgage rates will come during afternoon hours. If investor demand was strong, we should see bond prices rise and mortgage rates move lower. However, a lackluster interest fro m investors could lead to high mortgage rates tomorrow afternoon.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2007

Rate Lock Advisory - Sunday Oct. 21st

There are four pieces of data scheduled for release this week that may affect mortgage rates along with a Treasury auction. Only one of the four is considered to be of high importance to the markets, so I am expecting the stock markets to again play a significant role in bonds swings and changes to mortgage rates. With no relevant news scheduled for release tomorrow or Tuesday, we will likely see the bond market remain fairly calm, unless the stock markets post sizable gains or losses.

The first report is September's Existing Home Sales that will be posted at 10:00 AM ET Wednesday. September's New Home Sales data will be posted Thursday morning. These reports give us an indication of housing sector strength and mortgage credit demand. I don't see them having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts' forecasts could lead to a slight change in mortgage pricing.

At 8:30 AM ET Thursday, the Commerce Department will post Durable Goods Orders for September. This re port gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. Analysts are currently calling for an increase in new orders of approximately 1.5%. If we see a larger than expected rise in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast.

The week's last report comes at 10:00 AM ET Friday when the University of Michigan updates their Index of Consumer Sentiment for this month. Current forecasts show this index rising slightly from this month's preliminary reading of 82.0. This index is important because it helps us measure consumer confidence, which is believed to indicate consumers' willingness to spend. Since consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be important.

O verall, this is going to be a moderately busy week in the financial and mortgage markets. There is not a great deal of economic news scheduled for release in the week, so the stock markets and investor appetite for stocks compared to safety of bonds will likely be the biggest influence on mortgage rates. The Treasury auction is Thursday, when 5-year Notes will be sold. This will help gauge investor interest in bonds and could lead to a bond rally or selling.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.