The Markets Today:
The bond market opened in negative territory before reversing course. Meanwhile Mortgage backed securities (MBS) opened in negative territory and has tried to recover a few times, but remains down for the day. The stock markets, on the other hand, opened in and stayed in positive territory today. This is on news that consumer confidence fell last month, and that the Fed expects it may take a couple of years before the economy fully recovers.
- The Dow opened up 43 points from yesterday's close and is currently up 153 points
- NASDAQ opened up 15 points from yesterday's close
- The 10 Year Treasury Bond opened down 4/32 from yesterday's close and is currently up 6/32
- FNMA 30 Year Mortgage Backed Securities February 4.5 coupon opened down 9/32 from yesterday's close and currently down 9/32
Remember, on MBS, 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 3/32 from its opening on yesterday morning, and is currently down 3/32 this morning. I expect mortgage rates will most likely remain unchanged from yesterday.
Economic Reports for Today:
- Consumer Confidence Index (CCI) for February - The report released by the Conference Board showed a reading of 25.0, an all-time low. This shows that consumers are still concerned about their jobs and their overall financial situations. This means that consumers are less likely to make large purchases in the near future, and will limit economic growth. This is considered good news for bonds and mortgage rates.
News for Today:
Fed Chairman Ben Bernanke testified before the Senate Banking Committee on the status of the economy. Mr. Bernanke stated that he's optimistic that the recession would end later this year, but financial stability must be restored in order for the economy to recover. He also testified that it could take another two to three years for the economy to fully recover from the current recession.
There are six economic reports to be released this week that could potentially affect mortgage rates. Look for more details on next week's economic data releases and events on my Weekly Mortgage Market Watch.
Rate Volatility Index for Today:
Moderate Volatility. Overall, I am expecting to see some movement in the markets, and there's some upward pressure on mortgage rates again today, with increasingly higher volatility the remainder of the week.
If you haven't locked in yet, then I suggest that you continue floating. While floating continues to make sense right now, the ever increasing massive government debt could have an adverse affect on mortgage rates. If you like the rate that you are currently being offered, and if at that rate you are saving a considerable amount of money on your monthly mortgage payments, then there is nothing wrong with locking in.
My 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.
Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on the qualification requirements from mortgage program to mortgage program. If you like the rate today, then the safe bet is to lock in. Even if rates improve, most likely they won't improve enough in the short term to make you cry about it. But if you are an ardent market bear and believe that we'll keep hearing more bad economic for a while, and you have the money to risk, then you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking in now and watching rates get a little better.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB