Professional Home Staging and Photography Blog: The Daily Mortgage Interest Rate Lock Advisory - May 18, 2009

The Daily Mortgage Interest Rate Lock Advisory - May 18, 2009

What the Markets Are Doing Today:

The bond market, mortgage backed securities and the stock markets all opened in positive territory this morning following news that as Lowe's beat earnings estimates, as Goldman Sachs analysts put Bank of America on its "buy" list, and as signs point to an easing of the global recession.

  • The Dow opened up 105 points from Friday's close
  • NASDAQ opened up 20 points from Friday's close
  • The 10 Year Treasury Bond opened up 6/32 from Friday's close
  • FNMA 30 Year 4.0% coupon opened up 1/32 from Friday's close

 

The price of the FNMA 30-Year 4.0 coupon closed down 6/32 (white line) from its opening Friday, and is currently down 1/32 (blue line). Remember, on MBSs, as the price goes down, the yield goes up - and so do mortgage interest rates. Conversely, as the price goes up, the yield goes down - and mortgage interest rates go down with it. I expect that mortgage rates will 0.125 - 0.25 worse in pricing from Friday's close.

Economic Reports Being Released Today:

  • There are no economic reports scheduled for release today.

Important News of the Day:

According to Sheila Bair, Chairman of the Federal Deposit Insurance Corp. (FDIC), chief executives of a number of banks will be replaced in the next couple of months as the Fed scrutinizes financially troubled lenders.

This week will be pretty light in terms of scheduled economic releases. There are no major economic reports scheduled for release this week except for the minutes from the last FOMC meeting. Look for more details on next week's economic data releases and events on my Weekly Mortgage Market Watch.

What Happening With Mortgage Rates Today:

Light Volatility. Overall, I think it will be a fairly calm week for mortgage rates provided the stock markets stay calm and provided this week's economic data doesn't reveal any major surprises. The FOMC minutes, on the other hand, might lead to some volatility in the markets Tuesday afternoon.

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. In addition, there are sign that the global recession is easing, and the prices of US stocks are currently priced 55% less in value than their European counterparts.

No one knows how long rates will stay down this time or if they'll go any lower. In addition, the spring and summer home buying season is upon us. Mortgage rates historically climb this time of year before peaking in July or August. If you haven't locked in a rate yet, then you may want to consider doing so. Floating is making less sense now as the ever increasing massive government debt as well as the spring and summer home buying season could soon drive mortgage rates up even more. 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...

  • Lock 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. See today's mortgage rates at www.LewCorcoran.com/RateSheet.

 

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® • May 18 2009 10:01AM

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