What the Markets Are Doing Today:
The bond and Mortgage Backed Securities opened in slightly positive territory while the stock markets opened in negative territory this morning following news of a swine flu outbreak in New York.
- The Dow opened down 85 points from Friday's close
- NASDAQ opened down 23 points from Friday's close
- The 10 Year Treasury Bond opened up 14/32 from Friday's close
- FNMA 30 Year 4.0% coupon up 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 up 1/32 from its opening on Friday. I expect that today's mortgage rates will remain about the same again today as Friday's close.
Economic Reports Being Released Today:
- There are no economic reports scheduled for release today.
Important News of the Day:
Mortgage backed securities (MBS) prices are higher (rates lower) as investors are concerned about the administration's suggestion that the economy will continue to contract in the coming months.
There is a 2yr note auction early this afternoon. Traders will be watching for any changes in demand or reduced purchases by foreign central banks such as China. The Fed is also prepared to purchase Treasuries today as part of its plans to reduce borrowing costs.
This week will be very active in terms of economic releases scheduled for release 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.
What Happening With Mortgage Rates Today:
Moderate Volatility. Look for plenty of movement in the financial markets and mortgage rates this week. Wednesday will likely be the most important day of the week with the release of the Gross Domestic Product (GDP) report as well as the adjournment of the Federal Open Market Committee (FOMC) meeting. We may also see noticeable changes in mortgage rates tomorrow and Friday. If the reports being released this week reveal weaker than expected economic conditions, the bond markets may rally and mortgage rates could 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