Professional Home Staging and Photography Blog: The Daily Mortgage Interest Rate Lock Advisory - May 26, 2009

The Daily Mortgage Interest Rate Lock Advisory - May 26, 2009

What the Markets Are Doing Today:

The bond market and mortgage backed securities opened in positive territory while the stock markets opened in negative territory this morning. However, both the bond and stocks markets revered course on a much better then expected economic report.

  • The Dow opened down 43 points from Friday's close
  • NASDAQ opened down 13 points from Friday's close
  • The 10 Year Treasury Bond opened up 2/32 from Friday's close
  • FNMA 30 Year 4.0% coupon opened up 9/32 from yesterday'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 3/32 (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:

  • Consumer Confidence Index (CCI) - This report measures consumer willingness to spend. The report is revealed a reading of 54.9, and is much higher than the 42.0 reading that was expected. This follows a 39.2 reading in April. This means that consumers are much more optimistic about their own financial situations than many had thought. Consumer spending makes up two-thirds of the U.S. economy. This is negative news for bonds because rising confidence usually translates into higher level of consumer spending, which fuels the economy.

Important News of the Day:

A Case-Shiller report released today indicates that the housing market has yet to bottom out.  The S&P/Case-Shiller Home Price Index reveled that housing prices have continued to decline at a 18.7% year-to-year rate. According to David Blitzer, Chairman of the Index Committee at Standard & Poor's, "...we see no evidence that that a recovery in home prices has begun." 

There will be six important economic reports or news releases this week. Two of the six reports - the CCI and the Durable Goods Orders - are highly important to the bond market and mortgage pricing. The remaining reports are considered to be of moderate importance to the markets. 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:

Moderate Volatility. Overall, it will be a busy week for bonds and mortgage rates. There is a pretty good possibility of seeing mortgage rates change several times this week, so please proceed cautiously if still floating an interest rate.

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


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 26 2009 11:38AM


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