Professional Home Staging and Photography Blog: The Daily Mortgage Interest Rate Lock Advisory - April 23, 2009

The Daily Mortgage Interest Rate Lock Advisory - April 23, 2009

What the Markets Are Doing Today:

The bond market opened in slightly territory while the stock markets opened is positive territory this morning. Meanwhile, the Mortgage Backed Securities market opened flat again this morning.

  • The Dow opened up 10 points from yesterday's close
  • NASDAQ opened up 4 points from yesterday's close
  • The 10 Year Treasury Bond opened down 6/32 from yesterday's close
  • FNMA 30 Year 4.0% coupon opened flat

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. I expected that today's mortgage rates will remain the same again today as yesterday's close

Economic Reports Being Released Today:

  • Existing Homes Sales for March - The National Association of Realtors reported that home resales fell 3% last month. This decline was larger than expected, and indicates that the housing sector is not ready to rebound yet. This is considered good news for bonds, but this data is not considered to be a highly important to the markets. Therefore, the results will not have an impact on this morning's mortgage rates.
  • Jobless Claims - There were 640,000 new claims for unemployment last week. This nearly matched what analysts forecasted, so this will have little impact on this morning's bond trading and mortgage rates.

    However, continuing claims for unemployment continue to rise and jumped again to another record to 6.02 million. 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 $355 billion in MBSs. The Feds plan on purchasing up to $1.25 trillion in MBSs through December 31st.

Important News of the Day:

This week is fairly light in terms of economic releases. The Durable Goods Order report, which is being posted on Friday, is the only report of high importance being released this week. The LEI report released earlier today is of moderate 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:

Light Volatility. Overall, it should be a fairly quiet week for mortgage rates. Look for Friday to be the most important day of the week with the Durable Goods Order report being posted. The remainder of the week will likely be heavily influenced by the stock markets. If the stock markets rally this week, bonds and MBSs will most likely suffer and mortgage rates will move higher. On the other hand, if stocks fall during the week, we could see bond prices rise and mortgage rates fall.

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.


East Bridgewater, MA 02333
Phone: (508) 443-1332

Lew Corcoran, ASP®, IAHSP, IAHSP-CB
Accredited Home Staging Professional
Professional Real Estate Photographer

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Comment balloon 0 commentsLew Corcoran, ASP® • April 27 2009 09:45AM


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