Mortgage Rate Forecast: March 2009

What the Markets Are Doing Today:

Prices of bonds and mortgage backed securities opened down (yields up) again this morning while stocks opened up on stronger than expected economic data.

• The Dow opened up 87 points from yesterday's close
• NASDAQ opened up 19 points from yesterday's close
• The 10 Year Treasury Bond opened down 10/32 from yesterday's close
• FNMA 30 Year 4.5% coupon opened down 5/32 from yesterday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed down 2/32 from its opening on yesterday, but is currently down 3/32 this morning. I expect mortgage rates will be about the same in pricing as yesterday's rates.

Economic Reports Being Released Today:

• Durable Goods Orders for February - New orders for big-ticket items rose 3.4% in February - much more than the 2.0% decline that economists predicted - and is the first increase in 7 months. This indicates that the demand for durable goods was much stronger than originally thought. Overall, today's durables report was a pleasant shock. And, more economic indicators are starting to fall into the "improved" or "no longer falling" categories. However, this data can be quite volatile from month to month and cannot be relied upon as a strong indication that manufacturing activity is rebounding on a broad scale.
  
  
• New Home Sales Report - New home sales came in at a better than expected rate 337,000 million units on an annualized basis, more than 315,000 units analysts were expecting. And, this is a 4.7% gain over the previous month. However, while it's encouraging news for the housing sector, this data is not considered to be of high importance to the markets or to mortgage rates.

Important News of the Day:

The Feds will begin purchasing Treasury notes today - approximately $7.5 billion - which led to a drop in MBS prices (and an increase in yields) this morning. Hopefully this won't last and MBS prices should improve as the Feds are also purchasing MBSs.

There are economic reports scheduled for release in each of the remaining days this week, but none are considered to be of extreme importance. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.

What Happening With Mortgage Rates Today:

Moderate Volatility. Trader's are currently taking profits after last week's rally in the bond markets and yesterday's rally in the stock markets. Traders are also taking the opportunity to reposition their portfolios and prepare for the economic data that is scheduled for release over the next few weeks.

There's still continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations. That in and of itself may give rise to the concerns for inflation.

No one knows how long rates will stay down this time or if they'll go any lower. If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

What the Markets Are Doing Today:

Prices of bonds and mortgage backed securities opened down (yields up). Stocks also opened down this morning. There are no economic reports due out today.

• The Dow opened down 100 points from yesterday's close
• NASDAQ opened down 24 points from yesterday's close
• The 10 Year Treasury Bond opened down 15/32 from yesterday's close
• FNMA 30 Year 4.5% coupon opened down 3/32 from yesterday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed down 2/32 from its opening on yesterday, but is currently down 3/32 this morning. I expect mortgage rates will remain essentially unchanged in pricing from yesterday's close.

Economic Reports Being Released Today:

• There are no economic reports scheduled for release today.

Important News of the Day:

Ben Bernanke, Chairman of the Federal Reserve, Tim Geithner, and Secretary of the Treasury, will be testifying before the House Financial Services Committee today. On tap is AIG and the recent programs that were announced over the past few days.

There are economic reports scheduled for release in each of the remaining days this week, but none are considered to be of extreme importance. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.

What Happening With Mortgage Rates Today:

Moderate Volatility. Trader's are currently taking profits after last week's rally in the bond markets and yesterday's rally in the stock markets. Traders are also taking the opportunity to reposition their portfolios and prepare for the economic data that is scheduled for release over the next few weeks.

There's still continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations. That in and of itself may give rise to the concerns for inflation.

No one knows how long rates will stay down this time or if they'll go any lower. If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

What the Markets Are Doing Today:

Prices of bonds and mortgage backed securities opened down (yields up) slightly this morning before reversing course and are now down price (yields down). Stocks also opened up on better than expected existing housing sales and on news of the "toxic asset" purchase program.

• The Dow opened up 157 points from Friday's close
• NASDAQ opened up 28 point from Friday's close
• The 10 Year Treasury Bond opened down 1/32 from Friday's close
• FNMA 30 Year 4.5% coupon opened down 3/32 from Friday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed down 6/32 from its opening on Friday, but is currently up 4/32 this morning. I expect mortgage rates will remain the same in pricing as on Friday's close.

Economic Reports Being Released Today:

• Existing Home Sales Report - The National Association of Realtors announced late this morning that existing home resales rose 5.1% last month to an annualized rate of 4.62 million units. This is much better than the expected annualized rate of 4.5 million units. This means that the housing market is much more active than many had thought. Sales prices also firmed up, and are up 0.4% from the previous month. Meanwhile, the supply of homes on the market remains at 9.7 months. However, it's too early to tell if the housing market has hit bottom. This report is considered to be of low importance to the financial markets. Due to the pending announcement of the government's toxic asset plan, I do not expect this report to have any impact on the markets today.

Important News of the Day:

The Treasury Dept. released the details of the program to purchase up to $1 trillion in toxic assets from banks through the FDIC and the Federal Reserve. The toxic assets include mostly mortgage backed securities. This will be a public/private partnership with the government initially providing up to $75 - $100 billion for the program and private investors providing the rest.

However, some private investors may be reluctant to participate due to the recent turmoil surrounding AIG and the payments of bonuses to those in the financial sector. Investors are concerned that Congress may change the rules of the game midstream. Despite the concerns, equity investors and the global equity markets hope that the plan will finally put the financial institutions and the economy back on the road to recovery.

There are economic reports scheduled for release over several days this week, but none are considered to be of extreme importance. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.

What Happening With Mortgage Rates Today:

Moderate Volatility. Overall, it is difficult to label one particular day as the most important of the week. While the Durable Goods Orders is the most important report of the week, none of the week's data has the potential to be a major market mover. After the huge rally last Wednesday, we saw some weakness in bonds at the end of the week. It will be interesting to see how today's news on the government's plan to purchase up to $1 trillion in bank's toxic assets from the banks will influence this week's trading. If the markets react positively to the news, stocks could continue to move higher. This will put further pressure in bonds which in turn might lead to higher mortgage rates this week.

There's still continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations. That in and of itself may give rise to the concerns for inflation.

No one knows how long rates will stay down this time or if they'll go any lower. If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

What the Markets Are Doing Today:

Prices of bonds and mortgage backed securities opened up (yields down) this morning before reversing course and are now down in price (yields up). Stocks also opened up but are now heading into negative territory.

• The Dow opened up 28 points from yesterday's close
• NASDAQ opened up 5 point from yesterday's close
• The 10 Year Treasury Bond opened up 5/32 from yesterday's close
• FNMA 30 Year 4.5% coupon opened up 4/32 from yesterday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed down 12/32 from its opening yesterday, and is currently down 1/32 this morning. I expect mortgage rates will worsen by .125% - .25% in pricing from yesterday's close.

Economic Reports Being Released Today:

• There is no economic news scheduled for release today.

Important News of the Day:

Yesterday, the Feds reported that they have purchased more than $19 billion in mortgage backed securities (MBSs) over the past week. To date, the Feds have purchased over $236 billion in MBSs. The Feds plan on purchasing up to $1.25 trillion in MBSs through December 31st.

There was some pressure on bonds and mortgage backed securities yesterday and again this morning which drove mortgage rates up a little yesterday and today. We can expect to see some selling and profit taking that often comes after a major rally that occurs in a short period of time. While we will see some short term increases in mortgage rates, I expect that overall they will continue to fall in a relatively short period of time.

Ben Bernanke will be giving a speech at a bankers' conference in Phoenix, Arizona today. While it's not considered an important speech, whenever he does speak there's the possibility of a market reaction.

There are economic reports scheduled for release over several days of next week,, but none are considered to be of extreme importance. Look for more details on next week's economic data releases and events on my Weekly Mortgage Market Watch on Monday.

What Happening With Mortgage Rates Today:

Moderate Volatility. Overall, I'm expecting to see some movement in the stock and bond markets today and tomorrow. We had a huge rally in the bond and mortgage backed securities market yesterday afternoon, and there's potential for some profit taking.

There's still continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations. That in and of itself may give rise to the concerns for inflation.

No one knows how long rates will stay down this time or if they'll go any lower. If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

What the Markets Are Doing Today:

Stocks and bonds opened up (yields down) this morning while mortgage backed securities opened down. After the news yesterday afternoon, there's not much to say this morning other than expect some profit taking in the markets over the next couple of days.

• The Dow opened up 62 points from yesterday's close
• NASDAQ opened up 16 point from yesterday's close
• The 10 Year Treasury Bond opened up 14/32 from yesterday's close
• FNMA 30 Year 4.5% coupon opened down 5/32 from yesterday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed up 1 5/32 from its opening yesterday, but is currently down 1/32 this morning. I expect mortgage rates will improve by .125% - .25% from yesterday morning's opening.

Economic Reports Being Released Today:

• Leading Economic Indicators (LEI) for February - The index fell 0.4% last month, which is a little better than the 0.6% decline that economists had expected. The biggest contributors were continuing job losses and tumbling stock prices. Job losses are likely to continue to weigh down the index in the coming months. This suggests that economic activity will continue to slow down in the coming weeks. That is considered good news for bonds and mortgage rates.
  
  
• Jobless Claims - 655,000 new claims for jobless benefits were filed last week, a little more than the number of claims filed the previous week. The level of new claims filed has been steady for the past 7 weeks. However, continuing claims rose by another 185,000 in the first week of March to a record 5.3473 million, and has been rising for 9 straight weeks. This indicates that it's taking more time for the jobless to find work. With more people unemployed, the threat of wage based inflation is subdued. Employers do not have to pay higher wages to attract new employees during high unemployment times as people will be happy just to have a job. However, this data is not considered to be of high importance to the bond or the mortgage backed securities markets.
  
  
• Fed's MBS Purchase Program - The results of this week's purchases of mortgage backed securities (MBSs) by the Feds will be released in the afternoon. To date, the Feds have purchased over $217 billion in MBSs. The Feds plan on purchasing up to $1.25 trillion in MBSs through December 31st.
  

Important News of the Day:

There are no more economic reports that will be released this week. Look for details on next week's economic data releases and events on my Weekly Mortgage Market Watch on Monday.

What Happening With Mortgage Rates Today:

Moderate Volatility. Overall, I'm expecting to see some movement in the stock and bond markets today and tomorrow. We had a huge rally in the bond and mortgage backed securities market yesterday afternoon, and there's potential for some profit taking.

There's still continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations. That in and of itself may give rise to the concerns for inflation.

No one knows how long rates will stay down this time or if they'll go any lower. If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

There was a huge rally in the bond and mortgage backed securities (MBS) markets this afternoon. The rally came after the FOMC meeting that was held yesterday and today. The Feds have announced that they will purchase up to $300 billion in long term bonds in the 3^rd and 4^th quarter of this year. On the news, the 10 year bond rose in price by over 400 basis points (yields dropped). 1 basis point is 1/32, so the 10 year bond rose more than 128/32 in 30 minutes of trading this afternoon.

The Feds also announced that they intend to purchase up to $750 billion in mortgage backed securities over the same period. Upon the news, the price of MBS rose more 100 basis points (yields dropped) in the same 30 minutes. At this writing, MBS is up 119 basis points (1 6/32) which will translate to lower rates. Some lenders have already repriced for the better this afternoon, but not enough in my taste to warrant locking in now. Other lenders are holding back. I fully expect an improvement in mortgage rates tomorrow morning - some will improve by as much as 1/4% in the rate. That means if the rate is 5.0% at no points today, then it should be 4.75% at no points tomorrow.

Keep your eyes open, get those application started and get going - remember what happened in early January could happen again - rates dropped, but didn't stay down very long. We've been struggling to get back to that level for the past 2½ months. Also, lenders well get swamped with applications very quickly, will slow up the process, and will keep rates up as much as they can to throttle the flow. If the rate makes sense to you, lock it in and move on. You'll be glad it's over when you're done.

What the Markets Are Doing Today:

Prices of bonds and mortgage backed securities (MBS) markets both opened up (yields down) this morning while stocks opened down despite stronger than expected economic news.

• The Dow opened down 73 points from yesterday's close
• NASDAQ opened down 7 point from yesterday's close
• The 10 Year Treasury Bond opened up 7/32 from yesterday's close
• FNMA 30 Year 4.5% coupon opened up 1/32 from yesterday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed up 3/32 from its opening yesterday, and is currently down 1/32 this morning. I expect mortgage rates will remain essentially unchanged from yesterday's close.

Economic Reports Being Released Today:

• Consumer Price Index (CPI) for February -The CPI report showed a 0.4% increase in the overall index in February, is slightly higher than forecasted, and follows a 0.3% increase in January. There was a 0.2% increase in the core data, the same as expected and unchanged from January. The increases are primarily due to rising energy costs. Gasoline jumped 8.3% last month while food prices fell slightly by 0.1%. The CPI measures the change in prices and inflationary pressures at the consumer level, and is the most widely followed indicator of inflation. Stronger than expected readings is usually bad news for bonds and mortgage backed securities (which means prices fall and yields and mortgage rates rise). However, the report had no effect on bonds or mortgage backed securities as traders await the FOMC announcement this afternoon.

Important News of the Day:

The Federal Open Market Committee (FOMC) will close their meeting at 2 PM ET this afternoon and issue a press release at 2:15 PM ET. The key short term rate is at a range of 0% - .25% and likely will remain there for some time. The Federal Reserve should be more focused (hopefully) on economic recovery, the Treasury Debt purchase program as well as the Term Asset-Backed Securities Loan Facility (TALF) to unfreeze the credit markets.

In a letter written to Congress yesterday, Treasury Secretary Timothy Geithner wrote that $165 million will be withheld from the $30 billion that AIG is due to receive as part the bail-out package. "We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid," Mr Geithner's wrote in his letter. "In addition, we will deduct from the $30 billion in assistance an amount equal to the amount of those payments."

Andrew Cuomo, Attorney General of NY, revealed yesterday that 73 AIG executives were each awarded bonuses worth more than $1 million.

Meanwhile, Edward Liddy, CEO of AIG, will be testifying before Congress today.

The Mortgage Bankers Association reported that refinance mortgage applications were up more than 29% last week following the announcement of the Obama Administration's plan to save housing and lower mortgage rates.

There are several important economic reports that will be released this week - including the Producer Price Index and the Consumer Price Index, and another Federal Open Market Committee (FOMC) meeting today and tomorrow. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.

What Happening With Mortgage Rates Today:

Light Volatility in AM. Moderate Volatility in PM. Overall, I'm not expecting to see too much movement in the markets this morning while the FOMC meets. The important factor will be the statement released by the FOMC at 2:15 PM ET today - much will depend on what they say about current economic conditions, the outlook on inflation, and what their plans are to stimulate the economy moving forward.

There's continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations.

If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

Happy St. Patrick's Day

What the Markets Are Doing Today:

The bond and mortgage backed securities (MBS) markets both opened up slightly but are almost flat this morning. Stocks also opened up slightly,but have see-sawed between positive and negative territory this morning.

• The Dow opened up 5 points from yesterday's close
• NASDAQ opened up 8 point from yesterday's close
• The 10 Year Treasury Bond opened up 1/32 from yesterday's close
• FNMA 30 Year 4.5% coupon opened up 2/32 from yesterday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed down 1/32 from its opening yesterday, and is currently down 1/32 this morning. I expect mortgage rates will remain essentially unchanged from yesterday's close.

Economic Reports Being Released Today:

• Producer Price Index (PPI) for February - The PPI rose 0.1% last month, but it came in lower than the 0.4% rise that economists were predicting. It's the 2nd monthly increase, but came in lower than the 0.8% rise in January. The core PPI rate rose 0.2%, which came in slightly higher than predicted, but follows a 0.4% increase in January. While energy prices increased 1.3%, food prices fell 1.6%. Declining food prices was the biggest factor in the lower PPI numbers.
  
  The PPI is a measure of the average price level for a fixed basket of capital and consumer goods at the wholesale level before they are passed along to consumers. Thus, this index measures inflationary pressures at the producer level. There are two parts of the index - the overall reading and the core data. The core data is more important and is watched more closely because it excludes food and energy prices.
  
  Overall, the February PPI report shows that price pressures are easing despite some firming in energy costs. This is considered good for bonds and mortgage backed securities. This will help keep their prices up and yields (and mortgage rates) down.
  
  
• Housing Starts for February - Housing starts rebounded in February, rising more than 22% to an annualized rate of 583,000 units; this is much higher than the 455,000 new units analysts were predicting. However, the year-to-year rate is still down more than 47%. Most of the improvement was in multi-family homes. New housing permits rose 3% to 547,000 annualized units, but they are down more than 44% year-to-year.
  
  While new housing starts are encouraging, also remember that builders tend to slow down in the cold winter months, so the upsurge as the weather warmed may not be as strong as indicated. Additionally, this report is usually considered to be of little importance to the financial markets, and will likely have little or no impact on mortgage rates.

Important News of the Day:

The Federal Open Market Committee (FOMC) meets today and tomorrow, with a press release at 2:15 PM ET. The key short term rate is at a range of 0% - .25% and likely will remain there for some time. The Federal Reserve should be more focused (hopefully) on economic recovery, the Treasury Debt purchase program as well as the Term Asset-Backed Securities Loan Facility (TALF) to unfreeze the credit markets.

There are several important economic reports that will be released this week - including the Producer Price Index and the Consumer Price Index, and another Federal Open Market Committee (FOMC) meeting today and tomorrow. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.

What Happening With Mortgage Rates Today:

Light Volatility. Overall, I'm not expecting to see too much movement in the markets today or tomorrow morning while the FOMC meets.

There's continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations.

If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

What the Markets Are Doing Today:

The bond and mortgage backed securities (MBS) markets both opened in negative territory again this morning but gained as the day wore on. Meanwhile, stocks opened up as they continue their advance for the 5th consecutive day. Investors are hoping that the stock market has bottomed out and is beginning to stabilize.

• The Dow opened up 67 points from Friday's close
• NASDAQ opened up 11 point from Friday's close
• The 10 Year Treasury Bond opened down 9/32 from Friday's close
• FNMA 30 Year 4.5% coupon opened down 12/32 from Friday's close

Remember, on MBSs, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates. MBS closed on Friday down 3/32 from its opening and is currently down 1/32 this morning. I expect mortgage rates will cost 0.125% - 0.25% more in pricing today.

Economic Reports Being Released Today:

• Industrial Production Report for February - Industrial production fell 1.4% in February, the 5th consecutive month it declined, and is a little worse than expected. Analysts were expecting a 1.2% decline. As a comparison, industrial production fell 1.9% in January and fell 2.4% in December. The decline was led by the utilities sector which fell 7.7%. The mining sector, however, fell only 0.4%. While the manufacturing sector fell 0.7%, motor vehicles and parts production jumped 10.2%. A rising operating rate may be a warning sign of inflationary pressures and would be considered bad news for bonds and mortgage backed securities (which leads to higher rates). However, industrial production is still quite weak as it has fallen in 11 of the last 13 months. This overall decline is considered good news for bonds and mortgage backed securities (which leads to lower rates).

Important News of the Day:

In an interview with CBS's 60 Minutes yesterday, Ben Bernanke, Chairman of the Federal Reserve, said that the recession will end by the end of 2009 unless political leaders withdraw support for efforts to stabilize the financial system.

"We'll see the recession coming to an end probably this year," Bernanke said. "We'll see recovery beginning next year."

"The biggest risk is that, you know, we don't have the political will," he said. "We don't have the commitment to solve this problem, and that we let it just continue." "In which case, we, we can't count on recovery."

There are several important economic reports that will be released this week - including the Producer Price Index and the Consumer Price Index, and another Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch.

What Happening With Mortgage Rates Today:

Moderate Volatility. Overall, I am expecting to see some movement in the markets, and there's continued downward pressure on MBS prices (which means higher yields and mortgage rates). The supply of bonds and T-bills on the market continues to weigh heavily on the market. The government expects to issue between $2.7 trillion and $4.2 trillion in bonds over the next two years to pay for the massive debt obligations.

Stock investors are hoping a sustained rally could mean that the worst of the recent financial market meltdown is over. But that could lead to a new problem: diminishing support for bonds. Prices of treasuries may continue to fall (higher yields) if the recent stock market rally continues. However, there are reports that Ben Bernancke is considering purchasing long term bonds to help keep their yields down. If true, this would be similar to what the Bank of England is now doing. The rationale behind this is if the yields on treasuries are lower, then it may encourage investors to buy mortgage backed securities (MBS) instead as they will be paying a higher yield. This will drive the prices of MBS up which in turn lowers their yields (but still pay more than treasuries) and in turn lower mortgage rates. Remember, the government wants to keep mortgage rates low to help revitalize the housing industry which in turn will help to spark the economy. While this would be great news for the mortgage market, keep in mind that it's just a contingency plan and it may not be enacted. Also keep in mind that the Fed does not and can not set mortgage rates.

If you haven't locked in a rate yet, then you may want to continue floating. While floating continues to make sense right now, the ever increasing massive government debt could soon drive mortgage rates up. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in.

My Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Float if my closing was taking place within 7 days
• Float if my closing was taking place within 8 and 30 days
• Float if my closing was taking place between 31 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 any or all other borrowers.

Prices of Treasuries and Mortgage Backed Securities (MBSs) dropped (rates up!) today as China expressed a concern about the decline in the value of the US dollar. This has some traders concerned that China may begin selling the US bonds they hold. Additionally, If the dollar continues for drop in value, the Chinese will most likely purchase fewer MBS. This will cause bond and MBS prices to fall and yields and mortgage rates to rise. Meanwhile, stock prices have been climbing the past few of days.

The Feds again have delayed the Term Asset-Backed Securities Loan Facility (TALF), a program intended to revive consumer lending and unfreeze credit markets. The credit crunch gripping the financial system is causing demand throughout the world to slump as consumers and businesses pull back. This is raising the risk that consumer spending will fall again after stabilizing the last couple months. Additionally, as home values and stock prices continue to fall, U.S. household wealth fell over $5 trillion last quarter and is putting a damper on consumer spending and economic growth.