Monday's bond market has opened down slightly despite little action in the stock markets. The Dow is currently down 10 points and the Nasdaq nearly unchanged from Friday's close. The bond market is currently down 4/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point.
There was no relevant economic data posted this morning. We do, however, have Congressional testimony by Chairman Bernanke late this morning. He will be speaking to a House Financial committee about employment growth and whether further stimulus is needed. These are hot topics so his words may influence the markets and possibly mortgage rates.
Tomorrow morning brings us the first of this week's data with the release of February's Consumer Confidence Index (CCI) during late morning trading. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingnes s to spend. Since consumer spending makes up two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from 55.9 in January to 55.0 this month. A lower reading would be considered good news for bonds and mortgage rates.
Overall, look for plenty of movement in bond prices and mortgage rates this week. I think we will see the most movement either Wednesday or Thursday, but Friday may be fairly active also. This would be a very good week to maintain contact with your mortgage professional, especially if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I w ould do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2010
Monday, February 22, 2010
RATE UPDATE
U.S. and European financial markets shrugged off an early case of the jitters over a surprise Federal Reserve move to hike its seldom-used discount rate to close the week in positive territory.
The major U.S. indices finished at highs for the month, although still below their highest 2010 levels, reached on January 19. At the close, the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) stood at 10,402.35, up 9.45 points on the day. The NASDAQ Composite (an unmanaged index of common stocks listed on the NASDAQ National Stock Market) finished at 2,243.87, up 2.16 points over Thursday’s close and the S&P 500 (an unmanaged index of 500 widely held stocks) stood at 1,109.17, up 2.42 points for the day.
It may have been the unexpected timing of the Fed’s Thursday afternoon announcement that it was raising the “discount” rate a quarter point – to 0.75% from 0.50% – that caused Asian markets to stumble. This is the rate the Fed charges banks for emergency loans. It is seldom accessed and Fed Chairman Ben Bernanke had previously indicated it would be raised “before long,” says Raymond James’ Chief Economist Scott Brown. Economists generally dismissed the action as a technical move that need not have shaken the markets. It is the so-called fed funds overnight lending rate that is used as a base for interest and credit rates – and it remains unchanged at a range between 0% and 0.25%.
As the week ended, investors heard mildly positive reports. Consumer prices rose less than expected in January, and core prices, which exclude energy and food costs, actually fell for the first times since 1982, indicating an absence of inflation pressures. The Mortgage Bankers Association reported that fewer borrowers fell behind on their mortgage payments in the October-December quarter of 2009 – this at a time of year when delinquencies usually rise.
The major U.S. indices finished at highs for the month, although still below their highest 2010 levels, reached on January 19. At the close, the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) stood at 10,402.35, up 9.45 points on the day. The NASDAQ Composite (an unmanaged index of common stocks listed on the NASDAQ National Stock Market) finished at 2,243.87, up 2.16 points over Thursday’s close and the S&P 500 (an unmanaged index of 500 widely held stocks) stood at 1,109.17, up 2.42 points for the day.
It may have been the unexpected timing of the Fed’s Thursday afternoon announcement that it was raising the “discount” rate a quarter point – to 0.75% from 0.50% – that caused Asian markets to stumble. This is the rate the Fed charges banks for emergency loans. It is seldom accessed and Fed Chairman Ben Bernanke had previously indicated it would be raised “before long,” says Raymond James’ Chief Economist Scott Brown. Economists generally dismissed the action as a technical move that need not have shaken the markets. It is the so-called fed funds overnight lending rate that is used as a base for interest and credit rates – and it remains unchanged at a range between 0% and 0.25%.
As the week ended, investors heard mildly positive reports. Consumer prices rose less than expected in January, and core prices, which exclude energy and food costs, actually fell for the first times since 1982, indicating an absence of inflation pressures. The Mortgage Bankers Association reported that fewer borrowers fell behind on their mortgage payments in the October-December quarter of 2009 – this at a time of year when delinquencies usually rise.
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