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Tuesday's bond market has opened in positive territory as stocks show another round of losses. The stock markets are again posting early weakness with the Dow down 91 points and the Nasdaq down 17 points. The bond market is currently up 6/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.

September's Industrial Production report was released mid-morning today, revealing a 0.1% rise in output at U.S. factories, mines and utilities. This matched forecasts and has not had much of an impact on the markets this morning.

Tomorrow brings us three events to watch. The first is September's Consumer Price Index (CPI) at 8:40 AM ET. This index measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.2% in the overall index and an increase of 0.2% in the core data reading. A larger than expected increase in the core reading could raise inflation concerns in the bond market and push mortgage rates higher tomorrow. However, a smaller than expected reading should ease inflation concerns and lead to lower mortgage rates tomorrow.

Also scheduled for release is September's Housing Starts. It is the week's least important piece of data and us ually doesn't have much of an impact on the bond market and mortgage rates. It does give us an indication of housing sector strength and mortgage credit demand, but usually is not a mover of mortgage rates. It is expected to show a sizable decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.

The Fed Beige Book will be released tomorrow afternoon. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. If the 2:00 PM ET release reveals stronger signs of inflation and economic activity from the last release, we could see mortgage rates revise higher during afternoon trading.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my clo sing 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.

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.