What the Markets Are Doing Today:
Prices of bonds and mortgage backed securities opened up (yields down) this morning before reversing course and are now down in price (yields up). Stocks also opened up but are now heading into negative territory.
- The Dow opened up 28 points from yesterday's close
- NASDAQ opened up 5 point from yesterday's close
- The 10 Year Treasury Bond opened up 5/32 from yesterday's close
- FNMA 30 Year 4.5% coupon opened up 4/32 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 down 12/32 from its opening yesterday, and is currently down 1/32 this morning. I expect mortgage rates will worsen by .125% - .25% in pricing from yesterday's close.
Economic Reports Being Released Today:
- There is no economic news scheduled for release today.
Important News of the Day:
Yesterday, the Feds reported that they have purchased more than $19 billion in mortgage backed securities (MBSs) over the past week. To date, the Feds have purchased over $236 billion in MBSs. The Feds plan on purchasing up to $1.25 trillion in MBSs through December 31st.
There was some pressure on bonds and mortgage backed securities yesterday and again this morning which drove mortgage rates up a little yesterday and today. We can expect to see some selling and profit taking that often comes after a major rally that occurs in a short period of time. While we will see some short term increases in mortgage rates, I expect that overall they will continue to fall in a relatively short period of time.
Ben Bernanke will be giving a speech at a bankers' conference in Phoenix, Arizona today. While it's not considered an important speech, whenever he does speak there's the possibility of a market reaction.
There are economic reports scheduled for release over several days of next week,, but none are considered to be of extreme importance. Look for more details on next week's economic data releases and events on my Weekly Mortgage Market Watch on Monday.
What Happening With Mortgage Rates Today:
Moderate Volatility. Overall, I'm expecting to see some movement in the stock and bond markets today and tomorrow. We had a huge rally in the bond and mortgage backed securities market yesterday afternoon, and there's potential for some profit taking.
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