What the Markets Are Doing Today:
The bond and Mortgage Backed Securities opened in slightly negative territory while the stock markets opened in positive territory this morning after the release of better than expected economic news.
- The Dow opened up 48 points from yesterday's close
- NASDAQ opened up 10 points from yesterday's close
- The 10 Year Treasury Bond opened down 10/32 from yesterday's close
- FNMA 30 Year 4.0% coupon 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 up 6/32 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:
- Durable Goods Orders for March - The Commerce Department reported that new orders for durable goods fell 0.8% last month, which is better than what analysts predicted. Analysts were expecting a 1.5% drop in durable goods orders. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. The data could lead to a rise in stock prices and a drop in bond prices, and that could lead to higher mortgage rates.
- New Homes Sales for March - This report showed little change in sales of newly constructed homes between February and March. There are signs that sales of new home may have hit bottom as buyer traffic is increasing and mortgage rates are extremely low. Also, homebuilders appear to be offering huge discounts. While this report gives us an indication of housing sector strength and mortgage credit demand, it won't have any impact on the bond markets or mortgage rates unless it varies greatly from analysts' forecasts.
Important News of the Day:
It appears that while activity was higher than previously thought in February, there is little change from those higher levels in March. While it's too soon to tell, it appears that these sectors are beginning to stabilize. We'll know better next month.
Next week will be very active in terms of economic releases scheduled for release. None of them are due for Monday, but there is important data scheduled for the remaining days of the week - including another FOMC meeting. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch on Monday.
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
Lew Corcoran, ASP®, IAHSP, IAHSP-CB