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October 4th, 2007

November 4th, 2007 7:39 PM

October 4th, 2007

This week is very light in terms of economic releases for the markets to digest, especially compared to last week. There are two monthly and one quarterly reports on tap, but only the quarterly one can be considered to be highly important. This makes it quite likely that we will see a fairly quiet week in the mortgage markets, assuming that the stock markets do not repeat last week's volatility.

The first piece of data scheduled for release comes Wednesday morning with the release of the 3rd Quarter Productivity report. The productivity index is expected to show a level of worker productivity during the third quarter similar to last quarter's final reading of 3.1%. This would be good news for the bond market because high levels of productivity helps the economy to expand without inflationary pressures being a concern.

The final two releases of the week will be posted Friday morning. The first is Goods and Services Trade Balance report. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities' proceeds are worth more when sold and converted to the investor's domestic currency . However, its results will not likely directly lead to changes in mortgage rates.

November's preliminary University of Michigan Index of Consumer Sentiment will be released during late morning trading. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 80.0, down from October's final reading of 80.9.

There are 10-year Note and 30-year Bond auctions this week, Wednesday and Thursday respectively. Strong or very weak results from these sales could affect the momentum in the bond market and lead to afternoon changes in mortgage rates. It is common to see pressure in bonds ahead of these sales, but as long as interest from investors is decent we should see those pre-sale losses recovered during afternoon trading of the sale days.

Overall, look for a fairly quiet week in the mortgage market unless something totally unexpected transpires. As long as the stock markets re main fairly calm, I am expecting to see little movement in mortgage rates. However, I am extending the lock recommendation to short and mid term periods. This is not an indication that I necessarily feel mortgage rates will rise. It means that the risk versus reward scale is leaning towards the risk side. If mortgage rates are not likely to improve during that time frame, then there is little reward of continuing to float. Accordingly, a lock recommendation is appropriate in my opinion.

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

Posted by Michelle Hernandez on November 4th, 2007 7:39 PMPost a Comment (0)

November 25th

November 26th, 2007 6:44 AM

Rate Lock Advisory - Sunday Nov. 25th

This week brings us the release of an abundance of economic report s for the markets to digest. There are seven reports on the calendar with several being considered to be of high importance to the bond market and mortgage rates. With multiple moderately or highly important reports due out more than one day this week, we will likely see a fair amount of movement in mortgage rates day to day.

The week starts off relatively slow with no data scheduled for release tomorrow. The important report scheduled for release Tuesday is November's Consumer Confidence Index (CCI).

The Conference Board will release the CCI for the month of November at 10:00 AM ET, giving us a measurement of consumer willingness to spend. If consumer confidence is rising, analysts believe that consumers are more apt to make larger purchases, essentially fueling economic growth. This raises inflation concerns and usually pushes mortgage rates higher. Analysts are expecting a sizable drop from last month's 95.6 reading to somewhere around 91.5. A weaker than e xpected reading should be good news for mortgage rates, but a stronger than expected reading could push mortgage rates higher Tuesday.

October's Durable Goods Orders will be posted early Wednesday morning. This data helps us measure manufacturing strength by tracking orders for big-ticket items. It is expected to show no change in new orders from September's levels. A decline would be good news for the bond market and mortgage rates.

Also scheduled for release Wednesday is October's Existing Home Sales data. This report, along with Thursday's New Home Sales data is the least important of this week's data. They give us a measurement of housing sector strength and mortgage credit demand, but the bond market generally does not rely heavily on their results. Both reports will most likely be ignored due to the importance of other releases scheduled to be posted those days.

The other relevant report Wednesday is the Fed "Beige" Book, which will be re leased at 2:00 PM ET. The report itself probably will not show many surprises. It details economic activity throughout the U.S. by region. Signs of economic weakness should not come as a surprise to the markets and probably will not have had much of an impact on rates. But, the Fed does rely heavily on this data during their FOMC meetings, so any significant surprises could affect afternoon bond trading and possibly lead to changes in mortgage pricing Wednesday afternoon.

Thursday morning brings us the first revision to the 3rd Quarter Gross Domestic Product (GDP) reading. The GDP revision is expected to show an upward change from last month's preliminary reading of 3.9%. Current forecasts call for a reading of approximately 4.8%, meaning that there was more economic growth during the third quarter than previously thought. This is bad news for the bond market and mortgage rates, but the current mortgage rates are reflective of the expected revision. If it happens to show a reading of less than 4.8%, we should see the bond market improve and mortgage rates fall early Thursday.

Friday's only important data is October's Personal Income and Outlays data at 8:30 AM ET. This data is thought to measure consumers' ability to spend and their current spending habits. It is expected to show that income rose 0.4% and that spending rose 0.3%. Smaller than expected readings would be good news for bonds and could lead to improvements in mortgage rates.

Overall, I believe that it is going to be an active week for the mortgage market. Tomorrow will be the least important day of the week and either Tuesday or Wednesday will likely be the most important. I still expect to see plenty of movement in rates the remaining days, so please be careful and 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... 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

Posted by Michelle Hernandez on November 26th, 2007 6:44 AMPost a Comment (0)

November 19th, 2007

November 19th, 2007 11:36 AM

November 19th, 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.

Posted by Michelle Hernandez on November 19th, 2007 11:36 AMPost a Comment (0)

November 13, 2007

November 13th, 2007 10:38 AM

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.

Posted by Michelle Hernandez on November 13th, 2007 10:38 AMPost a Comment (0)

November 9th, 2007

November 9th, 2007 8:30 AM

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.

Posted by Michelle Hernandez on November 9th, 2007 8:30 AMPost a Comment (0)