Randy Nail Market Commentary

Market Commentary

2010-09-21T18:34:00.000-07:00

As expected, today's FOMC meeting has adjourned with no change to key short-term interest rates. However, the post-meeting statement did give us some favorable news that has helped boost bond prices this afternoon. The Fed indicated that they have concern about the pace of the economic recovery and that they are more worried that product prices will fall rather than increase, which means inflation is of little concern at this point. They also changed the verbiage used from the previous meeting to give a strong signal that they are prepared to use more stimulus to keep the economy moving in the right direction.

Their concerns underscore some theories that we will not see key short-term rates raised anytime soon. Some analysts felt rates had to be bumped higher to ease a potential spike in inflation later when the economy gains some traction. However, today's statement means that the Fed does not share that concern, which is great news for the bond market and mortgage pricing. A slow economic expansion with few signs of and little concern about inflation creates an extremely favorable environment for long-term securities such as mortgage-related bonds. These securities just became more appealing to investors because it is apparent that interest rates will remain low for some time and that the bond market's number one nemesis (inflation) is of no concern to the Federal Reserve.

We really could not ask for a better statement from the Fed other than a specific commitment to inject funds into government securities and mortgage bonds. The news caused come fluctuation in stock prices, but the major stock indexes are now close to pre-announcement levels. However, the bond market has made a nice run from earlier levels, currently standing up 31/32. This should create downward revisions to mortgage rates of approximately .125 - .250 of a discount point from this morning' s rates.

This morning's only factual economic data was August's Housing Starts that showed surprising strength in new home building. Analysts were expecting to see a minor increase in starts but the 10.5% jump that today's report revealed was well above forecasts. This can be considered a sign of housing strength, but since this data is not looked at as a major release, its impact on today's bond trading and mortgage pricing has been minimal.

There is no relevant economic data scheduled for release tomorrow, so we can expect to see the stock markets influence bond trading and mortgage rates. I would not be surprised to see this afternoon's bond rally extend into tomorrow's trading. The fact that there is no relevant economic data on tap tomorrow makes this even more likely, meaning that we may see further improvements to rates tomorrow morning.

There are two monthly reports scheduled for release Thursday in addition to weekly unemployme nt figures from the Labor Department. None of the three reports are likely to cause significant movement in mortgage rates, but if all show favorable results we could see some pricing improvements as a result.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.

Market Update

2010-07-07T07:12:00.001-07:00

Tuesday's bond market has opened up slightly despite sizable stock gains. The stock markets are kicking the week off with a post-holiday rally that has the Dow up 128 points and the Nasdaq up 34 points. The bond market is currently up 3/32, which should keep this morning's mortgage rates at Friday's levels.

The Institute for Supply Management (ISM) reported late this morning that their service sector index fell to 53.8 last month, down from 55.4 in May. Analysts were expecting to see a reading of 55.0, meaning that more surveyed businesses in the service sector felt business worsened during the month than last month. This is basically good news for the bond market and mortgage rates, but it was not enough of a variance from forecasts to have an impact on this morning's mortgage pricing.

The rest of the week is extremely light in terms of relevant economic reports or events that may affect mortgage rates. The only other economic data worth menti oning is Thursday's weekly unemployment figures from the Labor Department. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.

Overall, I am expecting to see a fairly quiet week in mortgage rates, especially if comparing to recent weeks. It is very difficult to label any particular day as the most important of the week with so little to influence trading. I suspect that the stock markets will be the biggest influence on trading and mortgage pricing, but if today's reaction is any indication of what to expect the next couple days, it will certainly be a quiet week for mortgage rates.

If I were considering financing/refinancing a home, I w ould.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Mortgage Commentary

2010-07-06T04:39:00.001-07:00

This holiday-shortened week brings us little economic data to drive the markets and mortgage rates. There are no reports scheduled this week that can be considered important. This makes it quite likely that the stock markets will have the biggest influence on the bond market and mortgage pricing the next several days.

The first piece of data comes late Tuesday morning when the Institute for Supply Management (ISM) will post their Services Index for June. This index is somewhat similar to last week's ISM Manufacturing Index but tracks sentiment at the services level. It has the potential to impact bond trading and mortgage rates if it shows a sizable variance from forecasts, particularly when little other data is being posted. However, it usually has little influence on mortgage pricing and cannot be considered a key report. Current forecasts are calling for a reading of 55.0, which would be a small decline from May's reading.

The only other ec onomic data worth mentioning is Thursday's weekly unemployment figures from the Labor Department. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.

Overall, I am expecting to see a fairly quiet week in mortgage rates, especially if comparing to recent weeks and the stock markets don't rally or go into a sell-off. The U.S. financial and mortgage markets are closed tomorrow in observance of the Independence Day holiday. They will reopen Tuesday morning for regular trading hours, but with little data and no other relevant events on tap this week, it is difficult to say which day will be the most important of the week.

If I were cons idering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-06-09T11:05:00.001-07:00

Wednesday's bond market has opened in negative territory again following early stock strength. The stock markets are showing sizable gains with the Dow up 113 points and the Nasdaq up 30 points. The bond market is down 12/32 as investors shift funds into stocks. However, due to some improvements in bond prices late yesterday, we should see little change in this morning's mortgage rates.

Fed Chairman Bernanke's statement to the House Budget Committee was the only relevant news this morning. He reiterated similar comments made Monday evening that helped influence trading yesterday. He said this morning that the U.S. economic recovery is moving in the right direction and that the European financial crisis will have a "moderate" impact on it but will not derail it. He mentioned that the employment and housing sectors are still of concern but his words seem to have reassured the markets that all will be well eventually.

The Fed will post its' Beige Book report at 2:00 PM ET this afternoon. This report is named simple for the color of its cover, but contains details about economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve to determine monetary policy during their FOMC meetings. If it shows much stronger economic activity than its last release, we could see mortgage rates rise this afternoon. Particularly if the report indicates inflation is growing.

We also have to watch for the results of today's 10-year Treasury Note auction. Results the sale will be posted at 1:00 PM ET. If investor demand was high for the Notes, we may see bonds rally during afternoon trading, however, weak demand could lead to broader selling in bonds and an increase to mortgage rates.

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... Float if my closi ng was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-06-01T04:59:00.001-07:00

This holiday-shortened week brings us the release of five important economic reports for the markets to digest. Two of the five are considered to be of very high importance to the bond market and mortgage rates. The remaining reports are considered to be of moderate importance to the markets. The financial and mortgage markets will be closed tomorrow in observance of the Memorial Day holiday and will reopen Tuesday morning.

The Institute for Supply Management's (ISM) manufacturing index will be posted late Tuesday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. Analysts are expecting to see a 58.9 reading in this month's release, meaning that sentiment fell slightly during May. A smaller reading will be good news for the bond market and mortgage shoppers while an unexpected increase could contribute to higher mortgage rates Tuesday.

There is no relevant data scheduled for release Wednesday, making it the best candidate for the least important day of the week. This is no guarantee that we will not see a change in mortgage rates Wednesday, but it will likely be much less active than some of the other days.

The revised 1st Quarter Productivity and Costs data is the first of three reports that will be released Thursday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation. It is believed that the economy can grow with low inflationary pressures when productivity is high. Last month's preliminary reading revealed a 3.6% increase, but I don't think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from its forecasted revised reading of 3.4%.

The second releas e of the day will come from the Commerce Department, who will post April's Factory Orders data during late morning trading. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn't expected to cause much change in rates this month. Current forecasts are calling for an increase in orders of 1.7%.

The third report of the day may have a noticeable impact on the markets or be a non-factor depending on its results. The Institute for Supply Management will release its services index late Thursday morning. It is expected to show a reading of 55.5, with the same principals as Tuesday's manufacturing index. If this reading varies greatly from forecasts, we may see volatility in the markets and mortgage rates. However, if its results are in the general area of expec tations, it will likely have no influence on the markets and mortgage pricing Thursday.

Friday's sole report is arguably the single most important report that we see each month. The Labor Department will post May's Employment data early Friday morning. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate slip from 9.9% in April to 9.8% this month with approximately 500,000 jobs added to the economy during the month. A higher than expected unemployment rate and a smaller number than 500,000 in new payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates Friday. However, stronger than expected numbers may lead to a spike in mortgage rates Friday morning.

Overall, Tuesday or Friday are likely to be the most important days of the week as they bring us the two most important reports on the agenda. If they give us weaker than expected results, we could close the week with lower mortgage rates than Tuesday's opening levels. However, if we see stronger than expected readings in those two releases, I expect mortgage rates to move higher on the week. But that is very much dependant on seeing a relatively calm week in stocks. As we have seen the past two weeks, the overseas concerns and stock market volatility can heavily influence bond trading and mortgage rates and significantly minimize the impact that these economic reports normally have on rates. Accordingly, it would be wise to maintain contact with your mortgage professional 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 c losing 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 all/any other borrowers.

©Mortgage Commentary 2010

2010-05-24T05:13:00.000-07:00

This week brings us the release of seven important economic reports or news releases in addition to two Treasury auctions that may influence rates. Three of the seven are considered to be of fairly high importance to the bond market and mortgage pricing. The remaining reports are considered to be of moderate or low importance to the markets.

The National Association of Realtors will give us the Existing Home Sales report late tomorrow morning. This data tracks resales of homes in the U.S. during April, giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a moderate increase in sales between March and April.

The Conference Board will start the week's more important releases by posting their Consumer Confidence Index (CCI) at 10:00 AM Tuesday. This is one of the more important releases of the week because is measures consumer willingness to spend. If the index rises, it indicates that consumers feel better about their personal financial situations and are more apt to make large purchases. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending makes up two-thirds of the U.S. economy. A decline should boost bond prices and push mortgage rates lower Tuesday morning. It is expected to show a reading of 58.3 after April's 57.9 reading.

We will get two monthly reports Wednesday morning. The more important of the two is April's Durable Goods Orders data. This report gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. It is currently expected to show an increase in new orders of approximately 1.4%. If this report shows a larger than expected rise, we should see mortgage rates move highe r because it indicates manufacturing growth. If it shows a smaller than expected increase, we could see rates improve Wednesday.

April's New Home Sales data will be released late Wednesday morning. This report gives us a measurement of housing sector strength and future mortgage credit demand. However, it is actually the least important release of the week and probably will not have much of an impact on mortgage pricing. It is expected to show an increase in sales.

The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released at 8:30 AM Thursday. The second revision to this report comes next month but isn't expected to have much of an impact on the financial markets. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best indicator of economic growth. Last month's preliminary reading revealed a 3.2% increase in the annual rate of growth. Analysts expect a sligh t upward revision to this reading with the consensus being a 3.3% rate of growth. If the upward revision is much stronger than expected, we may see the bond market react negatively and mortgage rates move higher.

April's Personal Income and Outlays data is the first of two reports due Friday. It will be posted at 8:30 AM and gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up two-thirds of the U.S. economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.4% increase in income and a 0.3% rise in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The second report of the day and the last relevant data of the week will come from the University of Michigan who will update their Index of Consumer Sentimen t for May. It is forecasted to show a small increase from this month's preliminary reading of 73.3. A reading above 73.7 would be considered negative for bonds.

Overall, I think we have a busy week ahead of us. The big reports of the week are Tuesday's CCI and Wednesday's Durable Goods Orders. If Thursday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. There are also a couple of Treasury auctions that are worth noting. The 5-year Note sale is Wednesday and the 7-year Note auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors.

The bond market will close early Friday afternoon ahead of next Monday's Memorial Day holiday. There is a pretty good possibility of seeing mortgage rates change several times this week, especially if there is more volatility in the stock markets, so ple ase proceed extremely cautiously 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 would 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

Market Commentary

2010-04-27T10:08:00.001-07:00

Tuesday's bond market has opened up sharply despite much stronger than expected economic news. Sizable stocks losses are also helping to boost bond prices this morning. The Dow is currently down 131 points while the Nasdaq is down 34 points. The bond market is currently up 20/32, which should improve this morning's mortgage rates by approximately .375 of a discount point. However, I would not be surprised to see further improvements to mortgage rates later today, especially of the stock markets extend their losses or the bond market moves higher than current levels.

The Conference Board gave us today's sole economic data late this morning. They reported that their Consumer Confidence Index (CCI) jumped to 57.9 this month, exceeding forecasts by several points. This means that surveyed consumers were much more optimistic about their own financial situations than many had thought. Normally, this data would have a negative impact on bond trading that would lead to higher mortgage rates. However, the stock selling and concerns about overseas economic situations has drawn a great deal of interest to bonds this morning.

There is no relevant economic data scheduled for release tomorrow, but we do have the FOMC meeting to be concerned with. The two-day meeting will adjourn at 2:15 PM ET tomorrow. There is a wide consensus that the Fed will leave key short-term interest rates unchanged at this meeting, but the post-meeting statement could create some fireworks if it gives any indication of when the Fed may start to raise rates. Market participants will also be looking for any concern about inflation and economic growth expectations. If the statement hints that there is concern about inflation, or if some of the common portions of the verbiage is changed, we could see the markets react heavily during afternoon hours. Whether or not that is good news for mortgage shoppers depends on how the content is construed by tra ders.

We also have the 5-year Treasury Note auction tomorrow. Results of the sale will be posted at 1:00 PM ET. There is a general feeling this morning that the sale may go fairly well. If this turns out to be the case, we may see more improvements to mortgage pricing late tomorrow, assuming that the FOMC meeting doesn't create a negative mood for bonds.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-26T04:15:00.000-07:00

This week is fairly active with four relevant economic reports in addition to another FOMC meeting and two fairly important Treasury auctions. All of the reports are considered to be at least moderately important while one particularly is considered very important to the markets and mortgage rates. This makes it likely that we will a fair amount of movement in mortgage pricing over the next several days.

The first report comes late Tuesday morning when the Consumer Confidence Index (CCI) for April will be released. This Conference Board index is a key indicator of future spending by consumers. The group surveys 5000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security and investments, they will probably delay making large purchases. T he latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation concerns to a minimum. But, a sizable increase could hurt the bond market, pushing mortgage rates higher Tuesday. It is expected to show a reading of 53.7, which would be a small increase from March's 52.5 reading.

This week's FOMC meeting will begin on Tuesday but will not adjourn until Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement. There appears to be more and more discussion about when the Fed will have to start raising key interest rates to prevent inflation from strengthening. If the statement gives any hint of when that may be, or there is a change in the regular canned portions of the statement, we could see a sizable change to mortgage rates Wednesday afternoon.

In a ddition to this week's economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes Wednesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET auction day, so look for any reaction to come during afternoon hours.

There is nothing of importance scheduled for Thursday morning but there are three reports scheduled for release late Friday morning. The first is the preliminary version of the 1st Quarter Gro ss Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets Friday and therefore the mortgage market also. Analysts are expecting to see an increase in output at an annual rate of 3.2%. A much smaller increase would be good news for mortgage rates. But, a stronger than expected reading would almost certainly cause stock prices to rise and bond prices to fall, leading to higher mortgage rates Friday morning.

The second report of the day is the 1st Quarter Employment Cost Index (ECI), which tracks employer costs for wages and benefits. This gives us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.5%.

The last is the University of Michigan's update to their Index of Consumer Sentiment for April. This report gives us an indication of consumer sentiment. I don't expect it to have a significant impact on bonds and mortgage pricing unless it varies greatly from forecasts. Current forecasts are calling for an upward revision to push the index to 71.5. This means that surveyed consumers were more optimistic about their own financial situations than they were earlier this month.

Overall, look for plenty of movement in the financial markets and mortgage some days this week, while others will probably be calm. Wednesday will likely be the most important day of the week with the FOMC adjournment, but we may see noticeable changes to rates Friday after the GDP is posted. If this week's reports reveal we aker than expected economic conditions, the bond market should extend its rally and mortgage rates should fall for the week. However, I recommend taking a cautious approach towards rates if still floating an interest rate and closing in the near future.

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... Float if my closing was taking place between 21 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 all/any other borrowers.

©Mortgage Commentary 2010

Market Commentary

2010-04-22T13:15:00.001-07:00

Thursday's bond market has opened in positive territory following early stock weakness. The stock markets are showing sizable losses with the Dow down 70 points and the Nasdaq down 17 points. The bond market is currently up 4/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

None of this morning's economic data can be considered favorable to the bond market or mortgage rates. The big news was March's Producer Price Index (PPI) that showed a 0.7% increase in the overall index and a 0.1% rise in the more important core data. The 0.7% reading was higher than expected, meaning prices at the producer level of the economy rose more than thought. That raises concerns because the costs usually have to be passed on to the consumer, fueling inflation. However, the core data reading that excludes more volatile food and energy prices matched forecasts, preventing bond selling. Therefore, we can consider this data to b e fairly neutral for mortgage rates.

The Labor Department said that new claims for unemployment benefits did fall last week as they were expected to do. The 456,000 new claims were a little higher than what analysts had forecast, but since it was still a sizable drop from the previous week's total of 480,000 claims this data has not impacted this morning's mortgage pricing.

The National Association of Realtors said late this morning that home resales rose 6.8% last month, exceeding expectations. This means that the housing sector was stronger than thought, which is negative news for bonds and mortgage rates. It is widely believed that the overall economy will not be able to really strengthen and maintain its recovery if the housing sector has not stabilized. So, we can consider this data negative for bonds also, but it is not considered to be a highly important report. This means it has had little influence on this morning's mortgage rates also.

March's Durable Goods Orders will be released early tomorrow morning. It gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. These are products with a life expectancy of at least three years. Current forecasts are calling for an increase in new orders of 0.2%. This would be a sign of slight manufacturing sector growth, but this data can be quite volatile from month-to-month. Therefore, a small variance between forecasts and the actual results will not heavily influence the markets or mortgage rates. A decline would be considered good news, while a large increase would indicate manufacturing sector strength. Ideally, the mortgage market would like to see a sizable decline in new orders.

Also tomorrow is the release of March's New Home Sales report. This data is similar to today's housing release except it covers the remaining 15% of home sales that today's does not. It is expected to show a n increase in sales of newly constructed homes. As with today's Existing Home Sales report, I don't see mortgage rates having much of a reaction to its results.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary - Update

2010-04-19T13:55:00.001-07:00

The bond market has slipped well into negative ground after the stock markets have moved well off earlier lows. The Dow is currently up 65 points after being down slightly earlier. The Nasdaq is still in negative ground but is close to the high of the day. The bond market is currently down 9/32, which will likely cause afternoon upward revisions to mortgage rates of approximately .125 - .250 of a discount point from this morning's rates.

This week is moderately active in terms of economic news scheduled for release. There are five reports scheduled, but only two of them carry the potential to cause noticeable movement in mortgage rates. Accordingly, there is a decent possibility of seeing a relatively calm week in the mortgage market, assuming that the stock markets do the same.

The Conference Board, who is a New York-based business research group, gave us today's only economic data. They reported t hat their Leading Economic Indicators (LEI) rose 1.4% last month, exceeding forecasts of a 1.0% increase. This means that the index is predicting rapid growth in economic activity over of the next several months, which can be considered negative news for the bond market and mortgage rates. However, since this data is considered to be only moderately important, its impact on this morning's rates was fairly minimal.

There is no relevant data scheduled for release tomorrow or Wednesday. Look for the stock markets to heavily influence bond trading and mortgage pricing the next couple of days. If the major stock indexes rally, bonds could suffer and push mortgage rates higher. Thursday or Friday will likely end up being the most important day of the week with the Producer Price Index (PPI) and Durable Goods reports being released respectively.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 da ys... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-19T06:51:00.001-07:00

This week is moderately active in terms of economic news scheduled for release. There are five reports scheduled, but only two of them carry the potential to cause noticeable movement in mortgage rates. Accordingly, there is a decent possibility of seeing a relatively calm week in the mortgage market, assuming that the stock markets do the same.

The week's first data comes late tomorrow morning when the Conference Board will release their Leading Economic Indicators (LEI) for March. This data attempts to measure economic activity over the next three to six months. This is considered to be a moderately important report, so we may see a slight movement in rates as a result of this report. It is expected to show an increase of 1.0%, meaning it is predicting rapid growth in economic activity of the next several months. A much smaller than expected increase would be considered good news for the bond market and could lead to slightly lower mortgage rates tomorrow.< br />
There is no relevant data scheduled for release Tuesday or Wednesday. The next report comes early Thursday morning when the Labor Department will post March's Producer Price Index (PPI). It will give us an important measurement of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices since it erodes the value of a bond's future fixed interest payments, leading to higher mortgage rates. However, a slight increase, or better yet a decline in prices, would be good news for the bond market and mortgage rates. Current forecasts are calling for a 0.5% increase in the overall reading and a 0.1% rise in the core data.

Also Thursday, the National Association of Realtor s will post March's Existing Homes Sales numbers. A similar report to this one and actually the week's least important data- March's New Home Sales will be released Friday morning. Both of these releases give us an indication of housing sector strength and mortgage credit demand, but unless they vary greatly from analysts' forecasts, I don't think they will cause much movement in mortgage rates. Both are expected to show increases from February's levels.

March's Durable Goods Orders will be released early Friday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts are calling for an increase in new orders of 0.2%. This would be a sign of slight manufacturing sector growth, but this data can be quite volatile from month-to-month. Therefore, a small variance between forecasts and the actual results will not heavily influence the markets or mortgage rates. A decline would be considered good news, while a large increase would indicate manufacturing sector strength. The latter could lead to higher mortgage rates Friday.

Overall, look for Thursday or Friday to be the most important day of the week with the PPI and Durable Goods reports being posted. The rest of the week will likely be heavily influenced by the stock markets. If the major stock indexes rally, bonds will likely suffer and mortgage rates will move higher. If stocks extend last Friday's fall, we could see mortgage rates move lower the next few days.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.

©Mortgage Commentary 2010

Market Commentary

2010-04-16T11:17:00.001-07:00

Friday's bond market has opened in positive territory following early stock selling and weaker than expected economic news. The stock markets are showing significant weakness with the Dow down 104 points and the Nasdaq down 24 points. The bond market is currently up 7/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

It appears that the stock markets may fall further, which should help boost bond prices throughout the day. I would not be surprised to see the major stock indexes move lower than current levels sometime today. If this is accurate, the bond market should benefit as investors seek safety from the volatility and I would not be surprised to see mortgage rates revise lower sometime this afternoon.

March's Housing Starts was posted early this morning, showing that new construction starts rose 1.6% last month. This was a larger increase than was expected, giving us a sign of housing sector strength. However, this data is not considered to be highly important to the markets or mortgage rates and has not influenced this morning's rates.

The second report of the day came from the University of Michigan who announced that their Index of Consumer Sentiment fell to 69.5 this month. This was well below forecasts of a 75.0 reading, meaning that consumers felt much worse about their own financial situations than many had thought. That usually translates into consumers delaying making a large purchase and helps limit economic growth. This is good news for the bond market and mortgage rates.

Next week is moderately busy in terms of relevant economic data being released. There are a couple of important reports scheduled, including a very important inflation index. Unlike most Monday's there is data being posted Monday that may influence mortgage pricing. March's Leading Economic Indicators (LEI) will be released late Monday morning. Look fo r more details on this report and the rest of next week's events in Sunday's weekly preview.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-15T13:15:00.000-07:00

Thursday's bond market has opened down slightly despite weaker than expected economic data and a negative open for stocks. The stock indexes are showing relatively minor losses with the Dow down 25 points and the Nasdaq down 1 point. The bond market is currently down 3/32, which will likely push this morning's mortgage rates approximately .125 - .250 of a discount point higher.

We saw some movement in the markets yesterday after the Fed Beige Book was released. It showed that 11 of the 12 Federal Reserve districts showed slight economic expansion. The growth in activity was minor and there were few signs of inflation becoming a threat. The report's contents did not come as a surprise and did little to influence theories of when the Fed may start raising key interest rates. The stock markets closed at higher levels than before its release while the bond market fluctuated during afternoon trading.

March's Industrial Production report was posted t his morning, giving us a measurement of manufacturing strength. It revealed a 0.1% increase in industrial output that was well below forecasts. Analysts were expecting to see a 0.7% rise in production, meaning manufacturing activity was not as strong as thought. That is considered good news for the bond market and mortgage rates.

Also posted this morning were last week's unemployment figures from the Labor Department. They announced that 484,000 new claims for unemployment benefits were filed last week. This was much higher than the 440,000 that was expected, indicating that the employment sector is getting weaker rather than strengthening. That bodes well for the bond market is the pattern continues.

There are two reports scheduled for release tomorrow that are somewhat relevant to mortgage pricing. March's Housing Starts is first, but it the least important of the two. It gives us a measurement of housing sector strength and mortgage credit deman d, however, usually doesn't cause much movement in mortgage pricing unless it varies greatly from forecasts. It is expected to show an increase in construction starts of new homes.

The final release of the week is the University of Michigan's Index of Consumer Sentiment at 9:45 AM ET tomorrow. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a decline from March's 73.6 reading. Current forecasts are calling for a reading of approximately 75.0.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-13T10:16:00.000-07:00

Tuesday's bond market has opened in positive territory again as the stock markets show minor losses after disappointing earning results from Dow component Alcoa. The Dow is currently down 14 points, but more importantly has fallen below the 11,000 mark it finally closed above yesterday. The Nasdaq is down 5 points. The bond market is currently up 4/32, which with yesterday's late strength should improve this morning's mortgage rates by approximately .250 - .375 of a discount point.

There was economic data posted today but it is not considered to be important to mortgage rates. February's Goods and Service Trade Balance was posted early this morning, revealing a larger than expected trade deficit of 39.7 billion. Since this data is aged and indirectly affects the bond market, it has had little impact on this morning's mortgage rates.

Tomorrow's data is a different story though. The Commerce Department will release March's Retail Sales data early tomorrow morning. This report gives us a measurement of consumer spending, which is very important because consumer spending makes up two-thirds of the U.S. economy. Forecasts are calling for a 1.2% increase in sales last month. If we see a larger increase in spending, the bond market will probably fall and mortgage rates will rise. However, weaker than expected results could push bond prices higher and mortgage rates lower tomorrow.

March's Consumer Price Index (CPI) will also be released early tomorrow morning. This index is one of the most important pieces of data we see each month. It measures inflationary pressures at the consumer level of the economy. If inflation is rapidly rising, bonds become less appealing to investors because it erodes the value of their future fixed interest payments. This leads to bond selling and higher mortgage rates. There are two readings in the index that traders watch. The first is the overall readi ng while the second is the more important core data reading that excludes more volatile food and energy prices. Analysts are expecting to see a 0.1% increase in both readings. If we see larger increases, we could get higher mortgage rates tomorrow.

These reports are both important enough to cause significant movement in rates. Therefore, if we get conflicting readings, they could offset each other. That could mean little change in rates tomorrow. However, if they both show favorable or unfavorable results, we will likely see a noticeable change in mortgage pricing tomorrow. Therefore, please maintain contact with your mortgage professional 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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-09T08:34:00.000-07:00

Friday's bond market has opened down slightly following early gains in stocks. The stock markets are looking to close the week with a positive day as the Dow is up 49 points and the Nasdaq has inched higher by 4 points. The bond market is currently down 5/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

There is no relevant economic data scheduled for release today. As expected, the stock markets are helping direct the bond market. If stocks move higher, we may see bonds move lower later today enough to possibly cause upward revisions to mortgage pricing. If stocks remain near current levels, we should see mortgage rates follow suit.

Yesterday's 30-year Bond auction went pretty well. There are several different measurements of whether a sale such as these go well or poorly. Many of the key stats of yesterday's sale would mean it was met with a strong demand, while only a couple measurem ents contradict that. But overall, the sale did not go poorly, which in itself is great news for the broader bond market and mortgage rates.

Next week brings us an abundance of economic data and reports that are relevant to mortgage rates. None of them are scheduled to be posted Monday and the week's least important report is Tuesday's only data. But between Wednesday and Friday we will get an extremely important inflation reading and a key measurement of consumer spending along with several other reports. We can expect to see the most movement in rates during the middle to latter part of the week, but look for more details on next week's events in Sunday's weekly preview.

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... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place ove r 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-08T11:14:00.000-07:00

Thursday's bond market has opened up slightly following news of a spike in unemployment claims and early stock weakness. The stock markets are showing losses with the Dow down 40 points and the Nasdaq down 17 points. The bond market is currently up 2/32, which with yesterday's late strength should lead to an improvement in this morning's mortgage rates of approximately .375 - .500 of a discount point over yesterday's morning rates.

The only factual economic data posted this morning was weekly unemployment figures from the Labor Department. They announced that 460,000 new claims for unemployment benefits were filed last week. This was much higher than the 435,000 that was expected. Because this data only tracks a single week's worth of new claims, it usually does not impact bond trading enough to affect mortgage rates. However, this morning's news did have a minor role in this morning's positive open.

Most of today's improvements in mortgage pr icing actually came as a result of a bond rally late yesterday. Buyers entered the market after the results of the 10-year Treasury Note action were posted yesterday afternoon. The sale went surprisingly well, which helped boost bonds in broader market. The result was downward revisions to mortgage rates late yesterday. Just how much an improvement you should see this morning depends on whether or not your lender revised rates lower yesterday afternoon and if so, by how much. Overall, the improvement should be in the neighborhood of .375 of a discount point when comparing to yesterday's morning rates.

The 30-year Bond auction is being held today. Even with the interest in yesterday's 10-year Note sale being strong, I am not expecting similar results in today's sale. As long as there is a fairly decent demand in today's auction, I suspect mortgage rates will remain near this morning's levels. But if the sale goes poorly, we may see some of yesterday's gains erased, leading to upward revisions to mortgage rates this afternoon. Results of the sale will be posted at 1:00 PM ET.

There is no relevant economic data scheduled for release tomorrow, so look for the stock markets to influence bond trading and mortgage pricing. If stocks move higher, expect bonds to fall and mortgage rates to increase. If stocks continue their weakness into this afternoon and tomorrow morning, we could see further improvements to mortgage rates tomorrow.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-07T10:11:00.000-07:00

Wednesday's bond market has opened fairly flat as investors cautiously prepare for today's important auction. The stock markets are showing losses with the Dow down 66 points and the Nasdaq down 5 points. The bond market is currently down 2/32, but we will probably still see an improvement in this morning's mortgage rates of approximately .125 - .250 of a discount point due to strength late yesterday.

There is no relevant economic data scheduled for release today. Yesterday's FOMC minutes did shed some light on the Fed's current thought process about rates and the economy. They indicated that despite recent signs of the economy gaining strength, they have concerns that it may not be able to continue on that pace. Any concerns about the economy being able to expand are considered to be good news for bonds and mortgage rates. However, the minutes also hinted that the Fed may be closer to raising key short-term interest rates than some had thought. The lan guage that the Fed had been using of ?an extended period? when referring to how long they expect those rates to remain this low was clarified to mean a change could come sooner than what was previously thought. Overall, the release didn't hurt the bond market or mortgage rates, but didn't do much to help them either.

There are two events worth watching today. The first is the 10-year Treasury Note auction, which is the more likely candidate to affect mortgage rates in my opinion. Results of the sale will be posted at 1:00 PM ET. Expectations for the sale are not high. If the investor demand was indeed weak, we may see selling in bonds this afternoon that lead to upward changes in mortgage rates. However, if we are surprised by a decent interest, particularly from international buyers, there is a good possibility of seeing bonds rally and mortgage rates move lower this afternoon.

The second event is a speech by Fed Chairman Bernanke at 1:30 PM ET. He is speaking in Dallas and is expected to touch on the economy. So, it does make our radar as something worth watching out for. If he gives an indication that the economy will have a difficult time recovering at its current pace, we may see bonds react favorably as a result. I suspect that he will not say much that is a surprise, so the likelihood of this event impacting mortgage rates is moderate.

There is no relevant economic data being posted tomorrow except for weekly unemployment figures from the Labor Department. They are expected to report that 435,000 new claims for unemployment benefits were filed last week. This would be a small decline from the previous week, but unless there is a large variance from that total, this data will have minimal influence on mortgage pricing.

There also is the 30-year Bond auction tomorrow. It will be the same pattern as today's 10-year Note sale with results being posted at 1:00 PM ET. This sale is somewh at relative to mortgage rates, but not nearly important as today's 10-year Note sale is. We usually see similar results, so if today's sale goes badly, there is little likelihood of tomorrow's going exceptionally well.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-06T13:26:00.000-07:00

Monday's bond market has opened in positive territory as yields in bonds make them more attractive to investors. The stock markets are helping the cause with small losses as the Dow shies away from the 11,000 level. The Dow is currently down 24 points while the Nasdaq has fallen 6 points. The bond market is currently up 10/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.

There was no particular event that led to this morning's buying in bonds. There are two factors that are contributing though. The first is that 11,000 threshold that the Dow is facing. If that is a strong resistance point and cannot break it, we could see stocks retreat in the immediate future. Declining stock prices make bonds more appealing to investors. The second factor is an important threshold for the bond market. The benchmark 10-year Treasury Note is flirting with 4.00% for the first time since October 2008. If the level is brok en, it could become a floor or support level for bonds, meaning that yields could be moving higher. The problem is that mortgage rates tend to follow bond yields, so breaking that 4.00% level likely means higher mortgage rates.

But the fact that we are seeing some strong levels of buying in bonds this morning tells us that some investors think this is as high as the yield will go. If the buying continues, it should attract more funds and investors look to get in before yields move much lower. That would be a favorable situation for mortgage shoppers because the falling yields will push mortgage rates lower. The key will be the next day or two. If bonds continue to move higher the next couple of days as a result of the buying (pushing yields lower), we could expect to see mortgage rates improve the rest of the week.

The minutes from the most recent FOMC meeting will be released this afternoon. There is no relevant economic data scheduled to be post ed today. Market participants will be looking at these minutes closely. They give us insight to the Fed's current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release, particularly about inflation or when the Fed may start raising key interest rates, could cause afternoon volatility in the markets and possible changes in mortgage pricing. Generally speaking, concerns about inflation will likely drive bond prices lower, causing yields and mortgage rates to rise.

There are two Treasury auctions scheduled this week that are relevant to mortgage rates. There is a 10-year Treasury Note sale tomorrow and a 30-year Bond sale Thursday. We could see some weakness in bonds ahead of the sales as investing firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. If the demand from investors was st rong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing tomorrow and/or Thursday afternoon.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary - Update

2010-04-05T10:57:00.001-07:00

Monday's bond market has opened in negative territory following early stock gains. The stocks markets are reacting favorably to Friday's data as they were expected to do. The Dow is currently 54 points while the Nasdaq has gained 22 points. The bond market is currently down 5/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point over Friday's morning rates.

This week brings us the release of little relevant economic data for the markets to digest. We will, however, see the minutes from the last FOMC meeting and have a couple of Treasury auctions to watch. There are no relevant monthly economic reports scheduled for release this week, so look for the stock markets to heavily influence bond trading and mortgage rates.

There is no relevant news scheduled until tomorrow afternoon when the FOMC minutes will be released. Market participants will be looking at these minutes closely. They give us insigh t to the Fed's current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release, particularly about inflation or when the Fed may start raising key interest rates, could cause afternoon volatility in the markets tomorrow and possible changes in mortgage pricing.

The two Treasury auctions are scheduled for Wednesday and Thursday. There is a 10-year Treasury Note sale Wednesday and a 30-year Bond sale Thursday. We could see some weakness in bonds ahead of the sales as investing firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. If the demand from investors was strong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing Wednesday and/or Thursd ay afternoon.

Overall, I am proceeding into this week very cautiously. There are several variables that could make this week very quiet or quite rocky for mortgage shoppers. Tomorrow's FOMC minutes could very well be a major market mover or a complete non-factor. The same goes for the Treasury auctions. In other words, we may have a very calm week ahead of us, or we may see rates move noticeably several days. With no important economic data to drive trading and mortgage rates, bonds may move opposite of stocks. This means large stock gains could lead to bond selling and higher mortgage rates. But stock weakness could lead to mortgage pricing improving for the week. Regardless, a lack of economic data is not reason to let our guard down if still floating an interest rate. Watch the market closely and proceed cautiously if not locked yet.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... F loat if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-05T07:04:00.001-07:00

This week brings us the release of little relevant economic data for the markets to digest. We will, however, see the minutes from the last FOMC meeting and have a couple of Treasury auctions to watch. There are no relevant monthly economic reports scheduled for release this week, so look for the stock markets to heavily influence bond trading and mortgage rates.

There is nothing of relevance scheduled for tomorrow, but it is the first opportunity for the stock markets to react to Friday's employment numbers. They were closed Friday in observance of the Good Friday holiday, so we won't get to see how the stock markets feel about the data until tomorrow's open. The bond market was open until noon Friday and reacted negatively to its results. It is likely that stocks will react positively to the data, making it difficult for bonds to move higher and mortgage rates to improve tomorrow.

There is no relevant news scheduled until Tuesday afternoon when the FOMC minutes will be released. Market participants will be looking at these minutes closely. They give us insight to the Fed's current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release, particularly about inflation or when the Fed may start raising key interest rates, could cause afternoon volatility in the markets Tuesday and possible changes in mortgage pricing.

The two Treasury auctions are scheduled for Wednesday and Thursday. There is a 10-year Treasury Note sale Wednesday and a 30-year Bond sale Thursday. We could see some weakness in bonds ahead of the sales as investing firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. If the demand from investors was strong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were m et with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing Wednesday and/or Thursday afternoon.

Overall, I am proceeding into this week very cautiously. There are several variables that could make this week very quiet or quite rocky for mortgage shoppers. Tuesday's FOMC minutes could very well be a major market mover or a complete non-factor. The same goes for the Treasury auctions. In other words, we may have a very calm week ahead of us, or we may see rates move noticeably several days. With no important economic data to drive trading and mortgage rates, bonds may move with stocks. This means large stock gains could lead to bond selling and higher mortgage rates. But stock weakness could lead to mortgage pricing improving for the week. Regardless, a lack of economic data is not reason to let our guard down if still floating an interest rate. Watch the market closely and proceed cautiously if not locked yet.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-04-02T08:20:00.001-07:00

Friday's bond market has opened in negative territory after this morning's Employment report showed a sizable improvement in the labor market. The stock markets are closed today in observance of the Good Friday holiday, but the bond market will be open until noon ET. It is currently down 12/32, which will likely lead to an increase of approximately .250 of a discount point in this morning's mortgage rates. However, many lenders may be closed today due to the holiday and will need to reflect this change in Monday's pricing.

This morning's data did show a significant improvement from February's readings. But when compared to forecasts, this data should be considered favorable for bonds. The report showed that the unemployment rate remained at 9.7% as it was expected to. The number of new jobs added to the economy during March totaled 162,000. This was short of the 184,000 that was expected after adjusting for an upward revision to February's total. It sh ould be safe to assume that the market was priced for those forecasts. In addition, nearly a third of the new jobs are thought to be only temporary Census workers and not permanent positions that can be relied on in the future.

So, we saw fewer jobs added than expected and the unemployment rate remained unchanged. This should be considered good news for bonds, or at least neutral. I believe that the thin holiday trading is skewing the market's reaction to the news. Many traders are home today for the holiday, leaving a skeleton staff at the office. The weak volume magnifies any selling that does take place. The result is a larger loss in bonds than we would likely see if the stock markets were open and full trading staffs were working today. We could see this corrected in Monday's trading when stocks begin trading and traders return from the long weekend.

Next week is very light in terms of economic releases. There is very little factual data sc heduled to be posted. The major events are the minutes from the most recent FOMC meeting and a couple of Treasury auctions. Look for more details on next week's event in Sunday's weekly preview.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-03-29T06:54:00.001-07:00

This week brings us the release of five reports that are considered relevant to mortgage rates but some of the data is considered to be very important and one is arguably the single most important data we see each month. There is relevant data being posted each day and it is considered a holiday week, so we can expect to see a fair amount of volatility in the markets and possibly mortgage rates the next few days.

The first is February's Personal Income & Outlays report early tomorrow morning. This data helps us measure consumers' ability to spend and current spending habits, which is important to the mortgage market because of the influence that consumer spending related information has on the financial markets. If a consumer's income is rising, they are more likely to make additional purchases. This raises inflation concerns and has a negative affect on the bond market and mortgage rates. Current forecasts are calling for a 0.1% increase in income and a 0.3% rise in spending.

March's Consumer Confidence Index (CCI) will be posted late Tuesday morning. This index gives us an indication of consumers' willingness to spend. Bond traders watch this data closely because consumer spending makes up two-thirds of our economy. If this report shows that confidence is falling, it would indicate that consumers are more apt to delay making large purchases. If the report reveals that confidence looks to be growing, we may see bond traders sell, pushing mortgage rates higher Tuesday morning. It is expected to show an increase from February's 46.0 reading to 50.0 for March.

February's Factory Orders will be released early Wednesday morning. This data is similar to last week's Durable Goods Orders report, except that this report includes orders for both durable and non-durable goods, giving us a measurement of manufacturing sector strength. It is also the least important of this week's five reports. Unles s it varies greatly from forecasts of a 0.5% increase, I suspect that it will be a non-factor in the mortgage market.

The Institute for Supply Management (ISM) will release their manufacturing index late Thursday morning. This index gives us an important measurement of manufacturer sentiment by surveying trade executives and is one of the more important of this week's data. A reading above 50 means more surveyed executives felt business improved during the month than those who said it had worsened. This month's report is expected to show a reading of 57.0, which would be a small increase from February's reading of 56.5. This means that analysts think business sentiment remained fairly close to last month's level.

The biggest news of the week will come early Friday morning when the Labor Department posts March's Employment report, giving us the U.S. unemployment rate and the number of jobs added or lost during the month. This is an extremely important re port to the financial and mortgage markets. It is expected to show that the unemployment rate remained at 9.7% and that approximately 190,000 payrolls were added during the month. A higher unemployment rate and a smaller than expected payroll number would be good news for bonds and would likely push mortgage rates lower Friday.

Overall, I expect to see the most movement in rates either Thursday or Friday. Friday is the most important day of the week with the employment numbers being released, but we will likely see a fair amount of movement in rates Thursday morning also. I am expecting tomorrow or Wednesday to be the calmest day of the week, but we should still see some changes to rates those days. In general, it will probably be pretty active week. Also worth noting is that fact that the stock markets will be closed Friday in observance of the Good Friday holiday, but the bond market will open for trading until noon. This will likely create additional volatili ty in bonds Thursday afternoon and especially Friday morning. Accordingly, it would be prudent to maintain contact with your mortgage professional 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... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-03-26T08:01:00.001-07:00

Friday's bond market has opened flat again as traders look to quietly end a very volatile week. The stock markets are showing gains with the Dow up 45 points and the Nasdaq up 12 points. The bond market is nearly unchanged from yesterday's close, which will likely keep this morning's rates very close to yesterday's levels.

The final revision to the 4th Quarter GDP did give us a little surprise. The final calculation shows a 5.6% annual rate of economic growth during the last three months of last year. This was a downward revision of 0.3%, meaning that economic activity was not as strong as expected. That can be considered good news for bonds and mortgage rates. However, a key inflation reading within the data was revised slightly higher than previously estimated. But, the age of the data and the fact that we will see fresh readings on the 1st quarter next month has prevented today's results from having much of an impact on this morning's mortgage rates.

The second report of the morning was the revision to the University of Michigan's Index of Consumer Sentiment for March. It showed a reading of 73.6, indicting that surveyed consumers were more optimistic about their own financial situations than many had thought. This month's initial reading was 72.5 and analysts were expecting to see a 73.0 reading this morning. Therefore, this data can be considered negative for bonds because it means consumers may be more willing to spend. Although, this report is not considered to be highly important so its impact on today's mortgage rates has been minimal.

Next week is very active in terms of relevant economic reports being released. There are reports scheduled to be posted every day next week. They start with February's Personal Income and Outlays data early Monday morning and conclude Friday with the almighty monthly Employment report. In between we have several releases scheduled that can influence mort gage rates also. It will be a holiday-shortened week for the stock markets, but not so much for the bond market. The stock markets will be closed Good Friday, but the bond market will open for a half day of trading. This means that the bond market will be able to react to Friday's key data but the stock markets will have to wait until Monday. Look for Sunday's weekly preview to detail next week's events.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Week Forecast

2010-03-22T06:42:00.000-07:00

This week brings us the release of five monthly and quarterly reports for the bond market to digest along with two relevant Treasury auctions. Two of the reports can be considered much less important than the others, but with mortgage-relevant events scheduled four out of the five days we will still likely see some movement in rates a couple days this week. Tomorrow is the only day of the week that there is not a relevant economic report scheduled for release or other event taking place that may affect mortgage rates.

The first report of the week is February's Existing Home Sales from the National Association of Realtors late Tuesday morning. It will give us a measurement of housing sector strength and mortgage credit demand, but is usually considered to be of low importance to the financial markets. Its' sister report- February's New Home Sales, will be posted Wednesday morning. Since it is Tuesday's only data, it may influence bond trading enough to cause a slight change in mortgage rates, but it will take a large variance from forecasts for it to heavily influence rates. Current forecasts have Tuesday's report showing a small decline in sales and Wednesday's data showing a minor increase in sales.

Wednesday's important data comes from the Commerce Department, who will post February's Durable Goods Orders. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show an increase in new orders of approximately 0.5%. A larger increase would be considered negative for bonds as it would indicate economic strength and could lead to higher mortgage rates Wednesday morning.

The next relevant data is Friday's final revision to the 4th Quarter GDP. This is the second an d final revision to January's preliminary reading of the U.S. Gross Domestic Product, or the sum of all goods and services produced in the U.S. It is expected to show no change to the reading of 5.9% that was posted last month. Analysts are now more concerned with next month's preliminary reading of the 1st quarter than data from three to six months ago, so I don't expect this report to affect mortgage rates much.

The final report of the week comes from the University of Michigan at 9:45 AM ET Friday. Their revision to their March Consumer Sentiment Index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. This is relevant because rising levels of confidence usually means consumers are more willing to make large purchases in the near future. That translates into fuel for economic growth. It is expected to show an increase from the preliminary reading of 72.5, meaning that surveyed consumers wer e more optimistic about their own financial situations than previously thought. Favorable results for bonds and mortgage rates would be a decline in confidence.

In addition to this week's economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes Wednesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET auction day, so look for any reaction to come during afternoon hours.

Overall, it is d ifficult to label one particular day as the most important of the week. The single most important report will likely be the Durable Goods Orders, but none of the week's data has the potential to be a major market mover. If the stock markets move lower, we should see gains in bonds and improvements in mortgage rates. But, if stocks move higher, pressure in bonds is possible, leading to higher mortgage pricing. I suspect that this week will be a little calmer for mortgage rates than the past couple weeks have been, but I still recommend proceeding with caution if you are 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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-03-18T10:54:00.001-07:00

Thursday's bond market has opened relatively flat after this morning's key inflation data failed to give us any surprises. The stock markets are mixed with the Dow currently up a few points while the Nasdaq has slipped 2 points. The bond market is currently down 2/32, which should keep this morning's mortgage rates very close to yesterday's levels.

There were technically three reports posted this morning that are worth noting, but by far the most important was February's Consumer Price Index (CPI). The Labor Department said that this important measurement of inflation at the consumer level of the economy was unchanged from January. This was slightly weaker than thought, but having more of an impact on trading was the 0.1% increase in the core data reading that excludes more volatile food and energy prices. Even though this matched forecasts, the fact that it did not show a stronger than expected reading has helped make bonds favorable this morning.

The Labor Department also gave us last week's unemployment figures, reporting that 457,000 new claims for unemployment benefits were filed last week. This was a little higher than what was expected, but since the release tracks only a single week's worth of claims it takes a large variance for it to significantly influence bond trading or mortgage pricing.

The Conference Board posted its Leading Economic Indicators (LEI) for February late this morning. It revealed a 0.1% increase, meaning economic activity should expand slightly over the next several months. This is index is considered to be moderately important to the markets and mortgage rates, so its influence on rates is fairly minimal also.

There is no relevant economic data scheduled for release tomorrow, so look for the stock markets to influence bond trading and mortgage rates. Tomorrow is an important option expiration date, which could translate into a fairly volatile day for the majo r stock indexes. This means we may see swings in stock prices throughout the day, but I don't believe it will significantly impact mortgage rates. Tomorrow will likely be a fairly calm day for the mortgage market.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-03-16T10:24:00.000-07:00

Tuesday's bond market has opened in positive territory despite the same for stocks and slightly stronger than expected economic data. The stock markets are posting small gains with the Dow up 19 points and the Nasdaq up 8 points. The bond market is currently up 5/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

February's Housing Starts was this morning's only relevant economic data. The Commerce Department reported that construction starts of new homes fell 5.9% last month. The decline can be considered good news for the bond market, but analysts were expecting a slightly larger drop. Also, this data is not considered to be greatly important to the markets or mortgage rates, so its impact on today's trading has been minimal.

Today's FOMC meeting will adjourn at 2:00 PM ET. It is widely believed that the Fed will make no change to key short-term interest rates at this meeting, but the post-meetin g statement will be watched closely for any indication of when they will make a move. Generally speaking, the bond market wants to hear that inflation is not an immediate concern and that key rates will be kept at current levels for the near future. If the statement reassures traders that the Fed will not be raising rates anytime soon, we can expected the bond market to thrive and mortgage rates to move lower. However, any hint of a move sooner than later could lead to bond selling and higher mortgage rates this afternoon.

Look for an update to this report shortly after the markets have an opportunity to react to the meeting's results.

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... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opin ion 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-03-15T06:34:00.001-07:00

This week brings us the release of five relevant economic reports along with an FOMC meeting for the markets to digest. The first piece of data will come mid-morning tomorrow when February's Industrial Production report is posted. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show no change in output from January's level. A decline would be considered favorable news for bonds and mortgage rates.

Tuesday's only factual economic news is February's Housing Starts, but it will likely not have much of an impact on mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand, but is usually considered to be of low importance to the financial markets. It is expected to show a decline in new starts from January to February.

The big news Tuesday will be the FOMC meeting that will adjourn at 2:00 PM ET. It is widely believed that the Fe d will make no change to key short-term interest rates at this meeting, but the post-meeting statement will be watched closely for any indication of when they will make a move. Generally speaking, the bond market wants to hear that inflation is not an immediate concern and that key rates will be kept at current levels for the near future. If the statement reassures traders that the Fed will not be raising rates anytime soon, we can expected the bond market to thrive and mortgage rates to move lower. However, if any hint of a move sooner than later could lead to bond selling and higher mortgage rates.

The Labor Department will post February's Producer Price Index (PPI) early Wednesday morning. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy prices. I f the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates Wednesday morning. Current forecasts are calling for a 0.2% decline in the overall reading and a 0.1% increase in the core data.

February's Consumer Price Index (CPI) will be released early Thursday, which measures inflationary pressures at the very important consumer level of the economy. Its results can definitely have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.1% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall Thursday.

The Conference Board will post its Leading Economic Indicators (LEI) for February late Thursday morni ng. This index attempts to measure economic activity over the next three to six months. Current forecasts are calling for a 0.1% increase, indicating that economic activity will likely expand slightly in the coming weeks. A decline would be considered good news for the bond market and mortgage rates.

Overall, look for Thursday to be the most important day of the week due to the CPI release, but Tuesday's FOMC meeting can also heavily influence the markets. Wednesday may also be an active day for rates with the PPI on tap. Friday will probably be the calmest day for mortgage rates, but it appears there is a good possibility of seeing plenty of movement in rates the next several days. Therefore, please proceed cautiously 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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary Update

2010-03-08T07:55:00.001-08:00

Monday's bond market has opened in negative territory, extending last week's generally negative tone. The stock markets are flat with both the Dow and Nasdaq nearly unchanged from Friday's close. The bond market is currently down 8/32, but we will still likely see a small improvement in rates due to strength in mortgage bonds late Friday.

There is no relevant economic data scheduled for release today. This makes it likely that any changes to mortgage pricing will come from swings in stock prices. If the stock markets move higher from current levels, we may see bonds worsen and mortgage rates revise higher later today. If the major stock indexes move lower, mortgage rates may follow suit.

The rest of the week brings us the release of three economic reports along with the 10-year Treasury Note and 30-year Bond auctions. All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, so today may not be the only day we look towards the stock markets for bond direction.

There are no relevant events scheduled for tomorrow or Wednesday morning either. The 10-year Treasury Note auction is scheduled for Wednesday while the 30-year bond sale will be held Thursday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. The results of the last sales do not give us much to look forward to, so it is not likely that these auctions will fuel a bond rally and a downward trend in mortgage pricing.

Overall, it will likely be another fairly active week in the mortgage market. Friday will probably be the most important day of the week with the Retail Sales report due, while the calmest day could be today or tomorrow, depending on the stock markets. I am expecting to see the most movement in rates the latter part of the week, so please be careful 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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-03-08T06:03:00.001-08:00

This week brings us the release of three economic releases for the bond and mortgage markets to digest along with 10-year Treasury Note and 30-year Bond auctions. All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, so several days will likely be influenced more by stock trading and other factors than the economic news of the day.

There are no relevant events scheduled for Monday or Tuesday. The 10-year Treasury Note auction is scheduled for Wednesday while the 30-year bond sale will be held Thursday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. The results of the last sales do not give us much to look forward to, so it is not likely that these auctions will fuel a bond rally and a downward t rend in mortgage pricing.

January's Goods and Services Trade Balance is the week's first economic data. It comes early Thursday morning and gives us the size of the U.S. trade deficit. It is the week's least important piece of news and likely will not influence mortgage rates much. Current forecasts are calling for a $41.0 billion trade deficit during January.

There will be two reports posted Friday morning. The first is at 8:30 AM and is the most important of the week. This is when February's Retail Sales data will be posted. It is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month's report is expected to show an increase in sales of approximately 0.2%. If Friday's release reveals a larger than expected increase, the bond market will likely fall and mortgage rates will mo ve higher. If it reveals a decline, I expect to see bond prices rise and mortgage rates improve Friday morning.

Also on tap Friday is the University of Michigan's Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending will likely rise, we may see mortgage rates move higher late Friday morning. It is expected to show a reading of 73.8, which is a slight increase from February's final reading.

Overall, it will likely be another active week in the mortgage market. Friday will probably be the most important day of the week with the Retail Sales report due, while the calmest day could be tomorrow or Tuesday, depending on the stock markets. I am expecting to see the most movement in rates the latter part of the week, so please be careful 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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-03-05T09:00:00.000-08:00

Friday's bond market opened well in negative territory following the release of stronger than expected employment data. The stock markets are reacting positively to the news with the Dow up 71 points and the Nasdaq up 16 points. The bond market is currently down 19/32, but due to strength in bonds late yesterday, this morning's increase in mortgage rates should be kept to approximately .125 - .250 of a discount point when compared to yesterday's morning pricing.

The Labor Department gave us this morning's key report. It showed that the U.S. unemployment rate remained at 9.7% last month when forecasts had called for a 0.1% increase. The number of jobs lost in the month came in at 36,000 when analysts were expecting a loss of 65,000 jobs. Both of these readings were negative for bonds and mortgage rates and positive for the stock markets since it paints less of a grim picture in the labor market as thought.

A bit of good news for the bond marke t came in the average hourly earnings reading that rose 0.1%. It was expected to show an increase of 0.2%, meaning income costs did not rise as much as thought. This is an indicator of wage inflation, so the lower the increase, the better for bonds. However, this reading is taking a backseat to the two headline figures of 9.7% and 36,000.

Today's data didn't do anything to change my cautious approach towards mortgage rates. There is some concern that the severe weather during February could have skewed the employment numbers. Unfortunately, nobody knows for sure or by how much. Therefore, we are seeing a negative reaction today and that tone will likely continue in the bond market until we see data that contradicts today's news. So, I would continue to proceed extremely cautiously if still floating an interest rate.

Next week is fairly light in terms of economic releases, but it does bring us one very important report. There are also two relevan t Treasury auctions on the calendar, but none of the events that are likely to affect mortgage rates are scheduled for release Monday or Tuesday. Look for more details on next week's events in Sunday's weekly preview.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Housing Activity

2010-02-26T06:30:00.000-08:00

*Housing activity dropped sharply in December in the aftermath of the expiration of the original first-time homebuyer’s tax credit. New home sales dropped by 7.6 percent to 342,000 units (seasonally adjusted annual rate, or SAAR) – the lowest level since March. Total existing home sales (single-family plus condominiums) plummeted by a record 16.7 percent to 5.45 million units (SAAR) – the lowest level in four months.

*For 2010, we forecast existing home sales to climb by 7.9 percent to 5.56 million units and new sales by 29.0 percent to 480 thousand units (reflecting their more depressed levels in 2009).

*There are likely to be some seasonal price declines in the winter months, some of which have been reflected in the recent data, with prices falling by 3-5 percent by the spring. Stronger sales and reduced inventory over the second half of the year should allow prices to be approximately unchanged over the course of 2010.

Source: PMI Mortgage Insurance

Market Commentary

2010-02-25T08:23:00.001-08:00

Thursday's bond market has opened in positive territory following favorable economic data and early stock market losses. The major stock indexes are giving back yesterday's gains with the Dow currently down 160 points and the Nasdaq down 30 points. The bond market is currently up 12/32, which should improve this morning's mortgage rates by approximately .125 of a discount point over yesterday's morning rates.

January's Durable Goods Orders report was released early this morning, showing a surprising 3.0% increase in new orders for big-ticket items. This was much larger than the 1.4% increase that was expected, however, an upward revision of 0.9% to December's orders made the month-to-month change less drastic. Also, a reading within the report that tracks new orders for products not attributed to transportation related items actually fell 0.6% when it was expected to rise. This means that overall new orders rose more than expected, but when more volatile tr ansportation related orders are excluded, new orders fell short of forecasts. We can consider these results neutral or slightly favorable to bonds.

The Labor Department gave us last week's unemployment figures, announcing that 496,000 new claims for benefits were filed last week. This was much higher than expected and just a bit shy of the important benchmark of 500,000. It also means that new claims rose 12% over the past two weeks, raising concerns that the employment crisis may be worsening before it gets much better. This data usually has little impact on the markets, but the back-to-back spikes have influenced bonds and mortgage rates favorably this morning.

Also worth noting are the second day of testimony from Fed Chairman Bernanke and the 7-year Treasury Note auction. Mr. Bernanke is expected to repeat yesterday's speech to the Senate Banking committee today, so it will likely have little influence on trading and mortgage rates unless the Q & A portion of the proceeding reveals any surprises. Yesterday's 5-year Note auction did not go very well, so there is little expectation that today's 7-year sale will go much better. I don't suspect these two events will create much movement in the markets today nor will they affect this afternoon's mortgage rates. If we see a revision to pricing, it will likely be a result of a significant swing in the major stock indexes.

There are two relevant reports being posted tomorrow. The first of two revisions to the 4th Quarter GDP reading is the first one. It will be posted early tomorrow morning. Analysts' forecasts currently call for an annual rate of growth of 5.7%, which would be no change from the preliminary estimate last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a sizable downward revision would be good news and could lead to improvements in mortgage pricing.

The last piece of data scheduled for release this week is the University of Michigan's revision to their Index of Consumer Sentiment for February late tomorrow morning. Current forecasts show this index revising slightly higher than previously thought. The preliminary reading was 73.7 and is now expected to stand at 73.9, indicating that consumer sentiment was slightly stronger than previously thought. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend.

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 would 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

Market Commentary

2010-02-24T09:52:00.001-08:00

Wednesday's bond market had initially opened down slightly but has since moved into positive territory during Fed Chairman Bernanke's congressional testimony. The stock markets are posting fairly strong gains after the Senate passed a $15 billion jobs creation bill. The Dow is currently up 75 points while the Nasdaq has gained 20 points. The bond market is currently up 4/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

January's New Home Sales report was posted late this morning, showing a surprising drop in sales of newly constructed homes. The 11.2% decline in sales last month dropped them to their lowest level on record. That indicates that the housing sector is not as stabile as some wanted to believe and can be good news for the bond market. However, this data covered only approximately 15% of all home sales in the U.S. Friday's Existing Home Sales report tracks the other 85% of sales.

Cha irman Bernanke is in the process of delivering the Fed's semi-annual testimony on the status of the economy to the House Financial Services Committee. During his prepared statement he indicated concern about the employment sector and the unemployment rate that is expected to remain high for quite some time. He also said that he expects inflation to remain under control. Both were good news for the bond market and helped move bonds into positive ground.

He will continue to answer questions from committee members and any surprise answers could lead to more volatility in the markets today. He will repeat this performance for the Senate Banking committee tomorrow, but the second day usually does not bring many surprises. The prepared statement will likely be quite similar to today's speech, so any shocking developments will have to come from the Q & A part of the proceeding.

The only important data scheduled for release tomorrow is January's Durable Go ods Orders data. This data gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A smaller increase than the 1.4% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month-to-month, so large swings are fairly normal.

We will also get weekly unemployment figures from the Labor Department, but unless there is a wide variance between the announced number of new claims and the 460,000 total that is expected, this data will probably have little impact on tomorrow's mortgage pricing.

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 w hat 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-22T10:53:00.001-08:00

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

RATE UPDATE

2010-02-22T06:32:00.001-08:00

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.

Market Commentary

2010-02-18T12:03:00.000-08:00

Since this mornings bond market opened in negative territory again following stronger than expected inflation news. The stock markets showed gains with the Dow up 18 points and the Nasdaq up 6 points. The bond market was down 9/32, which likely push this morning's mortgage rates higher by .30 of a discount point.

The Labor Department reports that January's Producer Price Index (PPI) rose 1.4% while the core data reading rose 0.3%. Both of these readings were well above forecasts, meaning inflationary pressures were stronger at the producer level of the economy than many had thought. This is certainly bad news for the bond market and mortgage rates because inflation erodes the value of a bond's future fixed interest payments, making them less appealing to investors. They are then sold at a discount, leading to higher yields and rising mortgage rates.

The Conference Board gave us January's Leading Economic Indicators ( LEI) late this morning. They announced a 0.3% increase that was below expectations. That means that the data is predicting a slower pace of economic growth over the next several months than the markets were expecting. This can be considered good news for bonds, but this data is not nearly important to the markets than the PPI reading was.

Yesterday's afternoon release of the FOMC meeting minutes didn't reveal many surprises. The most notable was a minor upward revision of their expectation for this year's unemployment rate. They also reiterated a prolonged period of high unemployment and slightly raised inflation targets for this year. But the news was not welcomed in the bond market and is likely contributing to today's selling, especially after this morning's stronger than expected inflation readings.

The Labor Department will be in the forefront again tomorrow when they post the more important Consumer Price Index (CPI) for January. This index measures inflationary pressures at the very important consumer level of the economy compared to today's release that measured the producer level. With exception to maybe the Employment report, the CPI is the most important report that we see each month. Its results can have a huge impact on the financial markets, especially on long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall. However, after today's PPI results, traders may be skeptical of getting favorable results tomorrow.

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 would 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

Market Commentary

2010-02-17T10:57:00.001-08:00

Wednesday's bond market has opened in negative territory following slightly stronger than expected economic data and a positive open for stocks. The stock markets are extending yesterday's afternoon rally, but to a much less degree. The Dow is currently up 44 points while the Nasdaq has gained 12 points. The bond market is currently down 9/32, but we may still see a slight improvement in this morning's rates compared to yesterday's morning pricing due to strength in bonds late yesterday.

This morning's first piece of economic data was January's Housing Starts. It revealed a larger than expected increase in starts and an upward revision to December's starts, hinting that the housing sector may be stronger than thought. Rising starts of new homes indicates more sales or stronger levels of optimism by builders. But, this data is not considered to be highly important to the markets or to mortgage rates. It is the week's least important data and has not ha d much of an influence on this morning's mortgage pricing.

Also posted this morning was January's Industrial Production data. It showed a 0.9% increase in output at U.S. factories, mines and utilities that exceeded forecasts. That indicates a level of manufacturing sector strength that is considered bad news for bonds and mortgage rates. However, this data is considered only moderately important, so it has not hurt mortgage rates this morning.

The third event of the day will be the release of the minutes from last FOMC meeting later today. Traders will be looking for any indication of the Fed's next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. I am expecting some volatility in the markets after the minutes are released.

The Labor Department will post January's Producer Price Index (PPI) early tomorrow morning. It measures inflationary pressures at the pro ducer level of the economy and is considered to be an important measurement of inflation. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show an increase of 0.8% in the overall reading and a 0.1% rise in the core data. Good news for bonds would be a decline in both readings, particularly the core data.

Also tomorrow morning will be the release of the Leading Economic Indicators (LEI) for January. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that economic activity may rise in the near future. A smaller than expected rise would be good news for the bond market and mortgage rates.

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 would 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

Market Commentary

2010-02-16T08:01:00.001-08:00

Tuesday's bond market has opened in negative territory due early gains in stocks. The stock markets are kicking-off the holiday shortened week with noticeable gains. The Dow is currently up 50 points while the Nasdaq has gained 7 points. The bond market is currently down 7/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point over Friday's morning rates.

There are five economic reports worth watching this week that are likely to affect mortgage rates in addition to the minutes from the last FOMC meeting, but none are scheduled to be released today. Tomorrow brings us three of them, one of which is the week's least important. That is January's Housing Starts, which will be posted early tomorrow morning. It gives us an indication of housing sector strength and mortgage credit demand. It usually does not affect rates unless it varies greatly from forecasts. Current forecasts are calling for an increase in st arts of new housing.

January's Industrial Production data will be released mid-morning tomorrow and is considered to be moderately important for mortgage rates. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting to see a 0.8% increase in production from December to January. A smaller than expected rise in output would be good news and should push bond prices higher, slightly lowering mortgage rates tomorrow morning.

The minutes from last FOMC meeting will be released during afternoon hours. Traders will be looking for any indication of the Fed's next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. This particular set of minutes could be interesting due to the wording of the last post-meeting statement. I suspect there was some debate amongst the FOMC members before releasing that sta tement. These minutes will likely clarify if there is a consensus amongst them or if there is disagreement about the Fed's actions or inactions. A consensus likely means a sooner change to key short-term rates. Accordingly, I am expecting some volatility in the markets after the minutes are released.

Overall, the most important day of the week will likely be Friday with the very important Consumer Price Index being released, but Thursday may also be active days for mortgage rates due to the Producer Price Index being posted. We also cannot forget about tomorrow's FOMC minutes as they may be a non-factor but also have the potential to heavily influence the markets and mortgage pricing. In other words, be prepared for an active week in the markets and mortgage rates.

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 m y 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 would 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

Market Commentary

2010-02-15T07:51:00.000-08:00

There are five economic reports worth watching this week that are likely to affect mortgage rates in addition to the minutes from the last FOMC meeting. The financial markets are closed today in observance of the President's Day Holiday and will reopen Tuesday morning. You may find some lenders to be open for business today, but I would not expect to see new rates issued until Tuesday.

Wednesday brings us three releases, including the week's least important of the five economic reports. January's Housing Starts will be posted early Wednesday morning, giving us an indication of housing sector strength and mortgage credit demand. It usually does not affect rates unless it varies greatly from forecasts. Current forecasts are calling for an increase in starts of new housing.

January's Industrial Production data will be released mid-morning Wednesday. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see a 0.8% increase in production from December to January. A smaller than expected rise in output would be good news and should push bond prices higher, lowering mortgage rates Wednesday.

The minutes from last FOMC meeting will be released Wednesday afternoon. Traders will be looking for any indication of the Fed's next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. This particular set of minutes could be interesting due to the wording of the last post-meeting statement. I suspect there was some debate amongst the FOMC members before releasing that statement. These minutes will likely clarify if there is a consensus amongst them or if there is disagreement about the Fed's actions or inactions. A consensus likely means a sooner change to key short-term rates. Accordingly, I am expecting some volatility in the markets after the minutes are released.

The Labor Department will post their Producer Price Index (PPI) for January early Thursday morning. It measures inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show an increase of 0.8% in the overall reading and a 0.1% rise in the core data. Good news for bonds would be a decline in both readings, particularly the core data.

Also Thursday morning will be the release of the Leading Economic Indicators (LEI) for January. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that economic activity may rise in the near f uture. A smaller than expected rise would be good news for the bond market and mortgage rates.

The Labor Department will release January's Consumer Price Index (CPI) at 8:30 AM ET Friday, which measures inflationary pressures at the very important consumer level of the economy. With exception to maybe the Employment report, the CPI is the most important report that we see each month. Its results can have a huge impact on the financial markets, especially on long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.2% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall.

Overall, the most important day of the week will likely be Friday with the CPI being released, but Wednesday and Thursday may also be active days for mortgage rates. In other words, be prepared for an active week in the markets and mortgage rates.

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 would 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

Market Commentary

2010-02-11T12:49:00.000-08:00

Thursday's bond market has opened in negative territory again with no important economic data or noticeable stock movements to influence trading. The stock markets are nearly unchanged from yesterday's close while the bond market is currently down 5/32.

The Labor Department gave us today's only economic data, but it was not anything considered highly important. They said that 440,000 new claims for unemployment benefits were filed last week. This was much lower than expected, indicating that the labor market may have been stronger than thought last week. However, since this data covers only a single week, it usually does not heavily influence bond trading or mortgage rates.

As expected, yesterday's 10-year Note auction did not go very well, leading to afternoon selling in bonds and this morning's increase in mortgage pricing. I have no reason to believe that today's 30-year Bond sale will go much better. But, I also don't believe we will see the same reaction as we did yesterday once the results are posted. The market is not expecting a strong sale, so unless it is a miserably weak auction, we likely will not see bonds react negatively enough to change mortgage rates later today. Results of the sale will be posted at 1:00 PM ET.

Tomorrow morning brings us the release of this week's most important data and one of the more important reports that we see each month. January's Retail Sales data will be released early tomorrow morning, giving us a key measurement of consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely. If it reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall. However, a stronger reading than the 0. 5% increase that is expected could lead to higher mortgage rates tomorrow morning.

February's preliminary reading to the University of Michigan Index of Consumer Sentiment will be released late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to rise from January's final reading of 74.4 to 75.0 for this month.

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... 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 in terest of all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-10T11:07:00.000-08:00

Wednesday's bond market has opened relatively flat as investors prepare for today's important 10-year Note auction. The stock markets are showing losses with the Dow down 72 points and the Nasdaq down 15 points. The bond market is currently up 2/32, but we will likely still see this morning's mortgage rates move higher by approximately .125 - .250 of a discount point due to weakness late yesterday.

Today's only semi-relevant economic data was December's Goods and Services Trade Balance. It revealed a $40.2 billion trade deficit that was much larger than expected. This data does not usually heavily influence mortgage rates, but can hurt or boost the U.S. dollar against other currencies that can make our securities more or less attractive to international investors. But today's data has not affected this morning's mortgage rates.

I suspect that today's 10-year Treasury Note auction will cause some afternoon revisions to mortgage rates today. I w ould be surprised if there was an overwhelmingly strong demand for the Notes, and as a result we could see afternoon weakness in bonds. This morning's flat open is not much concern as it is normal to see weakness ahead of the sales as participants prepare for them. But that any losses are usually recovered after if the sale goes well. Results will be posted at 1:00 PM ET, so any reaction would be during afternoon hours.

There is no important economic data scheduled for release tomorrow. We do get weekly unemployment figures from the Labor Department and there is a 30-year Bond auction for the market to digest. The Labor Department will post last week's unemployment number early tomorrow morning. They are expected to show that 465,000 new claims for benefits were filed last week, down from 480,000 the previous week. Because this tracks only a single week's worth of claims, it usually does not cause much movement in mortgage rates unless it varies greatly fro m forecasts.

The 30-year Bond auction is fairly relevant to the mortgage market, but today's 10-year Note sale will likely have a more direct impact on mortgage rates. Depending on today's sale goes, tomorrow's results could be a non-factor in the mortgage market. As with today's sale, results will be posted at 1:00 PM ET, so any reaction will be during afternoon trading.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

2010-02-09T10:20:00.001-08:00

Here is some interesting information I just picked up and thought I would share with you.

Federal Reserve's Board of Governors

Issued a Jan. 14 letter confirming that a broker price opinion "does not satisfy the definition of an appraisal in the Board's appraisal regulation."
The Fed's clarification was addressed to the Appraisal Institute and came in direct response to an Oct. 26, 2009, letter sent to the Fed by the nation's four largest appraiser organizations that asked the Fed about its policy on the use of BPOs in valuing land and other real property collateralizing commercial loans. "In response to your question as to the use of BPOs, it is the position of the Federal Reserve staff that a BPO does not satisfy the definition of an appraisal in the Board's appraisal regulation," the agency's letter read. "Therefore, a regulated institution would not be able to utilize a BPO to originate a loan secured by commercial real estate when the loan requires an appraisal in accordance with the appraisal regulation." In its letter, the Fed added: "With regard to the use of BPOs as an evaluation, Federal Reserve staff has taken the position that a BPO does not provide sufficient detail on a commercial property's condition, occupancy, and use to meet the guidelines' requirements for an evaluation."

CHALLENGES FOR FHA

The share of borrowers who are falling seriously behind on loans backed by the Federal Housing Administration jumped by more than a third in the past year, foreshadowing a crush of foreclosures that could further buffet an agency vital to the housing market's recovery.
About 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago, the agency's figures show.
Although the FHA's default rate has been climbing for months and eating into the agency's cash, the latest figures show that the FHA's woes are getting worse even as the housing market shows signs of improvement. The problems are rooted in FHA mortgages made in 2007 and 2008. Those loans are now maturing into their worst years because failures most often occur two to three years after a mortgage is made.
If the trend continues and the FHA's cash reserves are exhausted, the federal government would automatically use taxpayer money to cover the losses -- a first for the agency, which has always used the fees it charges borrowers to pay for its losses.
As these loans from 2007 and 2008 go bad and clear off of the FHA's books, agency officials said, losses are expected to taper off, aided by the housing market's anticipated recovery and an influx of more creditworthy borrowers, who have flocked to the FHA's home-buying program in the past year.
Agency officials said they have cracked down on poorly performing lenders and announced higher qualifying fees for borrowers. On Monday, the agency projected that the fees should generate $5.8 billion in fiscal 2011, up from $2 billion this year. That would fatten the FHA's cash cushion, used to cover unexpected losses.

Market Commentary - Update

2010-02-08T08:15:00.001-08:00

Monday's bond market has opened in negative territory despite a negative open in stocks. The Dow and Nasdaq are both showing early losses with the Dow down 47 points and the Nasdaq down 6 points. The bond market is currently down 3/32, which should keep this morning's mortgage rates near Friday's morning levels.

There are only three pieces of relevant economic data scheduled to be posted this week along with a couple of Treasury auctions, none of which will come today. Only one of the three reports is considered to be of high importance, while one is moderately important. The third is not considered to be of much importance unless it varies greatly from forecasts.

The first report comes Wednesday morning and is the least important of the three. That is when December's Goods and Services Trade Balance data will be posted. This report measures the U.S. trade deficit and can affect the value of the U.S. dollar versus other currencies, but it usually does not cause enough movement in bond prices to affect mortgage rates. It is expected to show a $35.0 billion trade deficit.

The two important Treasury auctions come Wednesday and Thursday when 10-year Notes and 30-year Bonds are sold. The 10-year sale is the more important one as it will give us an indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would likely result in upward revisions to mortgage rates.

Overall, look for Thursday to be the most important of the day of the week due to the importance of the Retail Sales report. But, I suspect that we may see movement in mortgage rates several days this week. I am still holding a cautious approach stance towards mortgage rates and believe that the risk of floating a rate outweighs the potential gains. Therefore, please be careful if still floating an interest rate this week.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-08T06:58:00.000-08:00

There are only three pieces of relevant economic data scheduled to be posted this week along with a couple of Treasury auctions. Only one of the three reports is considered to be of high importance while one is moderately important. The third is not considered to be of much importance unless it varies greatly from forecasts.

None of the economic reports will be posted tomorrow or Tuesday. The first report comes Wednesday morning and is the least important of the three. That is when December's Goods and Services Trade Balance data will be posted. This report measures the U.S. trade deficit and can affect the value of the U.S. dollar versus other currencies, but it usually does not cause enough movement in bond prices to affect mortgage rates. It is expected to show a $35.0 billion trade deficit.

The most important data of the week is Thursday's release of January's Retail Sales data. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely. If Thursday's report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall. However, a stronger reading than the 0.4% increase that is expected could lead to higher mortgage rates.

February's preliminary reading to the University of Michigan Index of Consumer Sentiment will be released late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to rise slightly from January's final reading of 74.4 to 74.8 for this month.

The two important Treasury auctions come Wednesday and Thursday when 10-year Notes and 30-year Bonds are sold. The 10-year sale is the more important one as it will give us an indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would likely result in upward revisions to mortgage rates.

Overall, look for Thursday to be the most important of the day of the week due to the importance of the Retail Sales report. But, I suspect that we may see movement in mortgage rates several days this week. I am still holding a cautious approach stance towards mortgage rates and believe that the risk of floating a rate outweighs the potential gains. Therefore, please be careful if still floating an interest rate this week.

If I were considering financing/refinancing a home, I wo uld.... 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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-05T13:10:00.001-08:00

Friday's bond market has opened fairly flat following this morning's release of January's employment figures. The stock markets are also relatively flat considering the past couple of days with the Dow down 11 points and the Nasdaq up 6 points. The bond market is currently up 2/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point. However, that change comes more from yesterday's rally than today's news.

The Labor Department gave us today's major news. The monthly Employment report is arguably the most important report we see each month. Ironically, the market reaction has been little, especially when yesterday's usually irrelevant weekly unemployment report helped fuel a major stock sell-off and nice bond rally. It is supposed to be the other way around- monthly report causes significant volatility while the weekly report is a non-factor.

Today's release actually gave us mixed results. The headl ine number was the 9.7% unemployment rate that was well below the 10.0% that was expected. But offsetting that negative news for bonds was the loss of 20,000 jobs when new payrolls were expected to be up 15,000. Also favorable to bonds was a sizable downward revision to December's payroll numbers. It was previously announced last month that 85,000 jobs were lost during December, but today's release revised that loss to 150,000. This means that more jobs were lost during the past two months than many had thought.

The end result is a fairly calm day in the markets, at least so far. It appears that traders are content and sticking with yesterday's movements. I believe that today's employment report was not as bad as many had thought it would be. Much of yesterday's stock selling and bond buying were a result of fears that today's report was going to point towards a much weaker employment situation. It was not strong enough for the market to take back yester day's changes, but not weak enough to fuel another around of stock selling. In fact, despite all of the volatility this week, mortgage rates have not moved nearly as much as one would think. Therefore, in my opinion this keeps us on the edge of a sizable improvement or loss. I am leaning towards the bond market giving back some of yesterday's gains, which could translate into higher mortgage rates in the immediate future. It may not be today, but my risk versus reward scale is tilted towards the risky side of floating an interest rate over the next couple of days.

Next week is pretty light in terms of economic data, but it does have one very important report and a couple of relevant Treasury auctions. There is nothing of importance scheduled for Monday. It will be difficult for the markets to be as active next week as they were this week, but we could see more movement in mortgage rates than we saw this past week. Look for more information on next week's even ts in Sunday's weekly preview.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-04T13:40:00.000-08:00

Thursday's bond market has opened up sharply following an early sell-off in stocks. The stock markets are in selling mode as investors become wary of tomorrow's key employment report. The Dow is currently down 192 points while the Nasdaq has lost 42 points. The bond market is currently up 18/32 as investors seek safe-haven, which should improve this morning's mortgage rates by approximately .150 of a discount point.

This morning's economic data gave us mixed results with the 4th quarter Employee Productivity and Costs data showing a 6.2% increase that fell short of expectations and December's Factory Order's data rising 1.0% compared to the 0.5% that was forecasted. Both of those can be considered negative for bonds and mortgage rates but neither is considered to be highly important.

The good economic news came from the Labor Department who reported that 480,000 new claims for unemployment claims were filed last week when analysts were expecting to see 455,000. While this data usually is not a major factor to the markets, it was enough of a variance from forecasts right before tomorrow's monthly figures that it caused selling in stocks. That led to bonds being in favor this morning and mortgage rates improving.

The Labor Department will be in the spot light again tomorrow morning when they post January's Employment data. This report will give us the U.S. unemployment rate and the number of jobs added or lost during the month among other related statistics. Analysts are expecting to see the unemployment rate remain at 10.0% and that approximately 15,000 new jobs were added to the economy. An increase in unemployment and a loss in payrolls would be great news for the bond market. It would probably create another bond market rally, leading to lower mortgage rates tomorrow morning. However, if the report reveals stronger than expected results, we can expect to see mortgage rates move higher tomorrow.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-03T10:52:00.001-08:00

Wednesday's bond market has opened in negative territory despite early stock weakness. The stock markets are giving back some of the gains form the previous two days with the Dow down 45 points and the Nasdaq down 7 points. The bond market is currently down 8/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

The Institute for Supply Management released their services index late this morning, announcing a reading of 50.5. This was a little lower than expected, and as mentioned yesterday did not have an impact on this morning's bond trading or mortgage rates.

There are a couple of relevant reports scheduled for release tomorrow. The first is Employee Productivity and Costs data for the 4th quarter will be released early tomorrow morning. It can cause some movement in the bond market, but should have a minimal impact on mortgage pricing. If it varies greatly from analysts' forecasts of a 6.5% increase, we may see some movement in mortgage rates. However, the markets will be much more interested in Friday's data.

Late tomorrow morning, December's Factory Orders data will be posted. It is similar to last week's Durable Goods Orders release in giving us a measurement of manufacturing sector strength, but this data includes new orders for both durable and non-durable goods. It is one of the less important reports of the week, but can influence mortgage pricing if it varies greatly from forecasts. It is expected to show a 0.5% increase in new orders.

The Labor Department will post last week's unemployment figures tomorrow morning also, however, with January's monthly figures coming Friday morning, this release will likely have less impact on rates than the minimal amount it usually does. Look for the other reports of the morning to have a bigger influence on bond trading and mortgage rates than the weekly unemployment figures.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-02T10:47:00.000-08:00

Tuesday's bond market has opened flat with no relevant economic data on tap. The stock markets are showing gains with the Dow up 54 points and the Nasdaq up 7 points. The bond market is currently up 2/32, which will likely keep this morning's mortgage rates at yesterday's levels.

There is no relevant economic data scheduled for release today. Neither of the two speaking engagements were market movers. Treasury Secretary Geithner spoke before a Senate Finance Committee about the U.S. budget while Paul Volcker, who is the Chairman of the President's Economic Recovery Advisory Board, spoke to the Senate Bank Committee about high-risk banking activities. Neither has resulted on any market movements.

Tomorrow's only data is not likely to affect mortgage rates. The Institute for Supply Management will post their services index late tomorrow morning. This is the same organization that posted Monday's manufacturing index that is considered to be infl uential on the markets. Tomorrow's index surveys service providers rather than manufacturers. But unless we see a wide variance from the 50.9 reading that is expected, I don't see mortgage rates reacting to its results.

Thursday brings us the release of two reports to watch. Employee Productivity and Costs data for the 4th quarter will be released early Thursday morning. It can cause some movement in the bond market, but should have a minimal impact on mortgage pricing. If it varies greatly from analysts' forecasts of a 6.0% increase, we may see some movement in mortgage rates. However, the markets will be much more interested in Friday's data.

Late Thursday morning, December's Factory Orders data will be posted. It is similar to last week's Durable Goods Orders release in giving us a measurement of manufacturing sector strength, but this data includes new orders for both durable and non-durable goods. It is one of the less important reports of the week, but can influence mortgage pricing if it varies greatly from forecasts.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary Afternoon Update

2010-02-01T13:41:00.001-08:00

Monday's bond market has opened well in negative territory following stronger than expected economic reports. The stock markets are starting the week in positive ground with the Dow up 74 points and the Nasdaq up 13 points. The bond market is currently down 17/32, but due to strength late Friday we will see little change to this morning's mortgage rates compared to Friday's morning rates.

There were two relevant reports posted this morning. The first was January's Personal Income and Outlays data early this morning. It showed a 0.4% increase in income and a 0.2% rise in spending. The income reading was stronger than expected, but the spending increase fell short of forecasts. Therefore, this report can be considered neutral for mortgage rates.

The second report of the day was the Institute of Supply Management's (ISM) manufacturing index. This index tracks manufacturer sentiment by rating surveyed trade executives' opinions of business conditi ons. It showed a reading of 58.4 that was well above what analysts were expecting to see. This means that more surveyed manufacturers felt business had improved last month than the previous month, indicating a strengthening manufacturing sector. This can be considered bad news for bonds and mortgage rates.

There is no relevant economic data scheduled for release tomorrow, but we do have two speaking engagements to watch. Treasury Secretary Geithner will speak before a Senate Finance Committee at 10:00 AM ET regarding the U.S. budget. At the same time, Paul Volcker who is the Chairman of the President's Economic Recovery Advisory Board, will testify to the Senate Bank Committee about high-risk banking activities. Since the government bonds are highly involved in the economic recovery and budget issues, these speeches may affect the markets if something unexpected is said. This could be positive or negative for bonds and mortgage rates, but are worth watching.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary

2010-02-01T08:15:00.000-08:00

This week is extremely busy in terms of economic data scheduled for release and will likely be another active week for mortgage rates. There are five economic releases scheduled for the week in addition to several speaking events for Fed and Cabinet members that may also influence the markets and mortgage rates. Four of these reports are considered to be of moderate or high importance, meaning we should see quite a bit of movement in mortgage rates this week.

The first report of the week is January's Personal Income and Outlays data tomorrow morning, which gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.3% while spending is expected to rise 0.3%. Larger increases would be good news for the stock markets and could hurt bond prices, driving mortgage rates higher tomorrow. Smaller than expected increases would be considered good news for mortgage rates.

Also schedule d for release tomorrow morning is the Institute of Supply Management's (ISM) manufacturing index. This index tracks manufacturer sentiment by rating surveyed trade executives' opinions of business conditions. It is usually the first economic data released each month and is one of this week's very important reports. Current forecasts are calling for a reading in the neighborhood of 55.2 that would be a decline from December's reading. The lower the reading, the better the news for the bond market and mortgage rates.

Employee Productivity and Costs data for the 4th quarter will be released early Thursday morning. It can cause some movement in the bond market, but should have a minimal impact on mortgage pricing. If it varies greatly from analysts' forecasts of a 6.0% increase, we may see some movement in mortgage rates. However, the markets will be much more interested in Friday's data.

Late Thursday morning, December's Factory Orders data will be posted. It is similar to last week's Durable Goods Orders release in giving us a measurement of manufacturing sector strength, but this data includes new orders for both durable and non-durable goods. It is one of the less important reports of the week, but can influence mortgage pricing if it varies greatly from forecasts.

Friday's data is by far the most important of the week. The Labor Department will post January's Employment data early Friday morning, giving us the U.S. unemployment rate and the number of jobs added or lost during the month among other related statistics. Analysts are expecting to see the unemployment rate remain at 10.0% and that approximately 13,000 new jobs were added to the economy. An increase in unemployment and a loss in payrolls would be great news for the bond market. It would probably create a bond market rally, leading to lower mortgage rates Friday morning. However, if Friday's report reveals stronger than expec ted results, we can expect to see mortgage rates move higher.

In addition to the factual economic data, we also have several public speaking events about the U.S. budget, monetary policy and other related topics. They are sprinkled throughout the week and can cause a market reaction if anything said surprises market participants.

Overall, look for tomorrow or Friday to be the biggest days for mortgage rates. Friday's Employment report is the most important piece of data, but we may see quite a bit of movement in rates tomorrow morning also. If we see weaker than expected results from Tomorrow's ISM report and Friday's employment data, we should see rates close the week lower than last Friday's closing levels. If the data shows stronger than expected results, we may see mortgage rates move higher for the week. This is of course, assuming that the Fed and Cabinet speeches don't reveal any surprises.

If I were considering fi nancing/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... 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 all/any other borrowers.
©Mortgage Commentary 2010

1/29/10 Market Commentary

2010-01-29T07:48:00.000-08:00

Friday's bond market has opened down again following stronger than expected results from some key economic data. The stock markets are showing early gains with the Dow up 62 points and the Nasdaq up 14 points. The bond market is currently down 6/32, but we will likely see little change in this morning's mortgage rates compared to yesterday's morning pricing due to strength in bonds late yesterday. This morning's potential increase in rates will be offset by the late gains of yesterday.

Today's most important report was the initial reading of the 4th Quarter Gross Domestic Product (GDP). It revealed a 5.7% annual rate of growth during the last quarter of 2009. This was much better than expected and the fastest pace in six years, indicating that the economy is likely growing at a faster pace than many had thought. That creates a negative for bonds because once the economy begins to gain momentum, inflations concerns will rise in the markets. Since inflat ion is the number one nemesis of the bond market, bonds tend to suffer when inflation is strengthening, leading to higher mortgage rates.

Preventing a sizable sell-off in bonds was a much lower than expected inflation reading within the data. That inflation reading came in half of forecasts, meaning that inflation isn't a concern yet. However, many experienced traders and analysts firmly believe that it will follow shortly if economic activity continues to grow at a pace similar to what today's GDP reading showed. Therefore, we have seen some selling in bonds, but considering the headline GDP reading, we should be content with this morning's trading.

The second piece of data that came out this morning was the 4th Quarter Employment Cost Index (ECI). It revealed a 0.5% increase in employer costs for wages and benefits. While this was higher than expected, it really has not had much of an impact on bond trading or mortgage rates because the GDP news is bigger news.

And to cap off today's relevant economic data was a higher than expected revision to the University of Michigan's Index of Consumer Sentiment for January. This index measures consumer confidence, which is thought to indicate consumer willingness to spend. The 74.4 reading indicates that consumers were more optimistic about their own financial situation this month than many had thought. Strengthening confidence usually translates into more consumer spending, fueling economic growth. However, this report doesn't carry enough power to heavily influence the markets, especially following the initial GDP reading for the quarter.

Next week brings us several important economic reports for the markets to digest. The first two come Monday morning with the release of December's Personal Income and Outlays data and January's ISM manufacturing index. The week ends with the almighty Employment report on Friday. There is not much to be concerned w ith in between, but the week will likely be an active one for the markets and mortgage rates. Look for more details on next week's events in Sunday's weekly preview.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

01/28/2010 Market Commentary

2010-01-28T10:59:00.000-08:00

Thursday's bond market has opened in negative territory as yesterday's afternoon weakness continues into this morning's trading. The stock markets are showing noticeable losses with the Dow down 74 points and the Nasdaq down 26 points. The bond market is currently down 5/32, which with yesterday's late losses will likely push this morning's mortgage rates approximately .375 - .500 of a discount point higher than yesterday's morning rates. Just how much of that increase will be seen this morning depends on whether or not your lender revised higher yesterday afternoon.

December's Durable Goods Orders was posted this morning, giving us an indication of manufacturing sector strength. It revealed a 0.3% increase in new orders for big-ticket products, which fell well short of analysts' forecasts of a 2.0% increase. However, if more volatile transportation related orders are excluded, such as orders for new aircraft, we saw a larger than expected increase of 0.9 %. Therefore, this report basically gives us mixed results, but should be considered slightly negative for bonds and mortgage rates.

In a bit of positive news, the Labor Department reported that 470,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week, but was much higher than the 450,000 that were expected. This is good news for bonds but its impact on trading and mortgage pricing is minimal because it is not considered to be very important news due to its single-week tracking.

There are three relevant reports scheduled for release tomorrow morning. The first is arguably the single most important report that we see regularly. The initial reading of the 4th Quarter Gross Domestic Product (GDP) will be posted early tomorrow. This data is so important because it is considered to be the best measurement of economic growth. The GDP itself is the total sum of all goods and services produced in the United States. Its' results usually have a major impact on the financial markets and can cause significant changes in mortgage rates. There are three readings to each quarter's activity, each released approximately one month apart. The first, which usually carries the most volatility, is expected to be an increase of 4.6%. A noticeably weaker reading would be great news for the bond market, questioning the pace of the economic recovery. That would likely fuel stock selling and a rally in bonds that would push mortgage rates lower tomorrow morning.

The 4th Quarter Employment Cost Index (ECI) is also scheduled for release early tomorrow morning. It measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. Current forecasts are showing an increase of 0.4%. A lower than expected reading would be favorable to bonds and mortgage rates, but the GDP reading will be the biggest influence on trading and rates tomorrow.

The last report of the week is the revised reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer confidence, which is thought to indicate consumer willingness to spend. I don't see this data having much of an impact on the markets or mortgage rates due to the importance of the employment index and GDP figures. It is expected to show a slight upward revision from the previous estimate of 72.8.

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... 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 all/any other borrowers.
©Mortgage Commentary 2010

1/26/10 Market Commentary

2010-01-26T12:45:00.001-08:00

Tuesday's bond market has opened in positive territory despite stronger than expected results form this morning's important economic news and stock market gains. The major stock indexes have rebounded from early opening losses to move into positive ground. The Dow is currently up 58 points while the Nasdaq has gained 10 points. The bond market is currently up 4/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.

The Conference Board released their Consumer Confidence Index (CCI) for January late this morning. They reported a reading of 55.9 that exceeded forecasts by over two points. This can be considered negative news for bonds because it indicates that consumers may be more willing to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. But fortunately mortgage shoppers, the data seems to have had little influence on this morning's bond trading and mortgage pricing.

December's New Home Sales report will be posted late tomorrow morning. It is expected to show an increase in sales of newly constructed homes, but is not important enough to heavily influence mortgage pricing.

Also tomorrow is the 5-year Note auction. Results of the sale will be posted at 1:00 PM ET. This sale doesn't directly impact mortgage rates, but it will gives us a measurement of investor interest in U.S. securities. If the demand for the sale was strong, the broader bond market will likely react positively, making an improvement to mortgage rates possible. However, a poor demand could lead to bond selling and higher mortgage rates tomorrow afternoon.

Today begins the 2-day FOMC meeting that will adjourn at 2:15 PM ET Wednesday. It is expected to yield no change to short-term interest rates, but as is often the case, traders will be looking for any indication of the Fed's next m ove and when they may make it. I believe that there is little chance of indicating a possible rate hike in the near future, so I don't believe that this meeting will have the influence they usually do.

It appears that tomorrow afternoon will be more active than tomorrow morning for the bond market and mortgage rates. The morning data is not very important since it covers only approximately 15% of all homes sold in the U.S. The 5-year Treasury Note auction is not the most important of the sales that we track. But it does carry the potential to influence the bond market enough to impact mortgage pricing. And that takes us to the FOMC results that can cause more movement in the markets than both of the other events combined. So, I would not be surprised to see the most movement in mortgage rates to come during afternoon hours.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if m y closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

1/21/10 Market Commentary

2010-01-21T08:04:00.001-08:00

Thursday's bond market has opened in negative territory following mixed economic data and a mixed open in stocks. The major stock indexes are moving in opposite directions this morning with the Dow currently down 28 points and the Nasdaq up 10 points. The bond market is currently down 5/32, but we will likely still see a slight improvement in this morning's mortgage rates due to strength late yesterday.

The Labor Department reported this morning that 482,000 new claims for unemployment benefits were filed last week. This was much higher than the 440,000 that was expected and hints that further weakness in the employment sector may be ahead. However, this was only a single week's worth of data so look for next Thursday's numbers to be watched closely. Unfortunately for bonds and mortgage shoppers, this data does not usually have a lot of influence on the markets because it covers such a sort time frame. But the surprising jump did garner some attention in the markets, making next week's release more important.

The Conference Board, who is a New York-based business research group, posted December's Leading Economic Indicators (LEI) late this morning. They reported a surprising 1.1% jump, well over the 0.7% increase that was expected. This means that they are predicting a rapid increase in economic activity over the next three to six months. While that is more of a prediction than factual results, if it is an accurate forecast it would not bode well for bonds and mortgage rates in the near future.

There is no relevant economic data tomorrow, so look for the stock markets to be the biggest influence on bond trading and mortgage rates. I suspect it may be a fairly quiet day for rates unless something drastic happens to stocks or unexpected news comes out.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

1/19/2010 Market Commentary

2010-01-19T13:41:00.000-08:00

Tuesday's bond market has opened in negative territory as stocks recover a good part of Friday's losses. The stock markets are off to a strong start following yesterday's holiday with the Dow up 73 points and the Nasdaq up 22 points. The bond market is down 6/32, which should push this morning's mortgage rates higher by approximately .125 of a discount point over Friday's morning rates.

This week brings us the release of three pieces of economic data to digest, but only one is considered to be of high importance. The first two reports will be released early tomorrow morning. The Labor Department will post their Producer Price Index (PPI) and the Commerce Department will release December's Housing Starts data, both at 8:30 AM. The PPI is much more important to the markets and mortgage rates because it measures inflationary pressures at the producer level of the economy. It is the sister report to last week's Consumer Price Index (CPI) that didn't give us an y major surprises. Analysts are expecting to see no change in the overall reading and a 0.1% increase in the more important core data reading that excludes volatile food and energy prices. Unexpected increases, particularly in the core reading, could mean higher mortgage rates tomorrow.

December's Housing Starts helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don't see it causing much movement in mortgage rates tomorrow. It is expected to show little change from November's starts.

Overall, tomorrow will likely turnout to be the most important day of the week with the PPI scheduled. If it meets expectations or is lower than forecasts, we could see mortgage rates close the week lower than this morning's opening levels. There will be discussion about Congress raising the debt ceiling this week that ma y bring the amount of outstanding U.S. debt in focus again. Unfortunately, if it becomes a hot topic, the bond market may see pressure as everyone is reminded about the large sum of debt we currently have outstanding. But, I don't think we have too much to be concerned with in this week's economic data and could see the rates move little this week.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

1/15/10 Market Commentary

2010-01-15T12:35:00.000-08:00

Friday's bond market has opened in positive territory following early stock weakness. The stock markets are showing losses despite stronger than expected earnings results from giants Intel and JPMorgan Chase. The Dow is currently down nearly 100 points while the Nasdaq has fallen 24 points. This has made bonds more attractive to investors as a safe-haven. The end result is the bond market up 15/32, which should improve this morning's mortgage rates by approximately .250 of a discount point over yesterday's morning pricing.

The Labor Department reported early this morning that December's Consumer Price Index (CPI) rose 0.1% and that the more important core data reading increased 0.1%. The core data matched forecasts but the overall reading was slightly lower than expectations. The news is somewhat positive for bonds because it means inflationary pressures remained subdued at the consumer level of the economy. But since it nearly matched expectations, its im pact on this morning's mortgage rates has been fairly minimal.

December's Industrial Production report was the second report of the morning. It revealed a 0.6% increase in out at U.S. factories, mines and utilities. That matched forecasts, indicating moderate growth in the manufacturing sector. But since it did not surprise traders, it had no influence on this morning's trading or mortgage rates.

The third and final report of the day was the University of Michigan's Index of Consumer Sentiment for December. It came in at 72.8, falling short of the 73.8 that was expected. This means that consumers were less optimistic about their own financial situations than many had thought. That can be considered favorable news for the bond market because waning confidence usually translates into less consumer spending and weaker economic activity.

Next week is pretty light in terms of the number of economic reports scheduled for release. There is onl y one important report scheduled and it comes the middle part of the week. The markets will be closed Monday in observance of the Martin Luther King Jr. holiday, but there will not be an early close this afternoon. Look for more details on next week's events in Sunday's weekly preview.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

1/14/2010 Market Commentary Update

2010-01-14T12:06:00.000-08:00

THURSDAY AFTERNOON UPDATE:

The bond market has improved from early gains following a fairly strong 30-year Bond auction. The stock markets have not moved too much from this morning's levels with the Dow currently up 30 points and the Nasdaq up 8 points. The bond market has improved from this morning, currently up 19/32. This will likely improve this afternoon's mortgage rates slightly, even after this morning's improvement. But, many lenders may opt to wait until tomorrow's pricing to reflect this improvement.

The Commerce Department reported this morning that retail level sales fell 0.3% last month, falling well short of expectations. Analysts were expecting to see a 0.5% increase in sales, meaning consumers spent less last month than many had thought. This is good news for bonds and mortgage rates because drops in consumer spending eases inflation and economic recovery concerns. That creates a favorable environment for the bond market and mo rtgage rates. However, minimizing this news was a sizable upward revision to November's sales, indicating that consumers spent more in November than was previously thought.

There are three economic reports scheduled for release tomorrow morning. The first is December's Consumer Price Index (CPI). This is also one of the most important monthly reports that we see since it measures inflationary pressures at the consumer level of the economy. The overall index is expected to rise 0.2% while the core data is expected to increase 0.1%. Weaker than expected readings should lead to bond improvements and lower mortgage rates tomorrow morning.

December's Industrial Production report is the second report. It will be released at 9:15 AM ET and measures output at U.S. factories, mines and utilities. This gives us a good indication of manufacturing sector strength or weakness. Current forecasts are calling for an increase in production of 0.6% from November's lev el. A smaller than expected increase would be considered good news for bonds and should lead to lower mortgage rates as long as the CPI doesn't reveal any negative surprises.

The final report of the week is January's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates. Good news would be if it shows a reading weaker than the 73.8 that is expected. However, it is not one of the week's more important releases and probably will have little impact on tomorrow's mortgage rates due to the importance of the CPI and production reports.

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... Float if my closing was taking place between 21 and 60 days... Float if my closing w as 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 all/any other borrowers.
©Mortgage Commentary 2010

1/13/2010 Market Commentary

2010-01-13T10:12:00.001-08:00

Wednesday's bond market has opened in negative territory as investors prepare for today's auction. The stock markets are in positive ground with the Dow up 28 points and the Nasdaq up 6 points. The bond market is currently down 8/32, but we likely will see little change in this morning's mortgage rates due to strength late yesterday.

Today's only relevant economic news will come from the Federal Reserve this afternoon when they post their Beige Book report. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. It will be released at 2:00 PM ET, so any reaction to its results will come later today.

Also on tap today is the 10-year Treasury Note auction. If there is a strong demand for them during the sal e, we should see the bond market move higher during afternoon trading. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates. We will repeat this scenario tomorrow for the 30-year Bond auction.

Tomorrow morning brings us the release of December's Retail Sales data. This is one of the more important reports we see each month it measures consumer spending by tracking sales at retail establishments in the U.S. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. Current forecasts are calling for an increase in sales of approximately 0.5%. A smaller than expected increase would be good news for bonds and mortgage rates tomorrow.

The Labor Department will post last week's unemployment figures tomorrow morning also. T hey are expected to show that 436,000 new claims for benefits were filed last week, but I doubt this data will cause much movement in mortgage rates. It tracks only a week's worth of new claims, so its impact on the markets is usually minimal.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

1/12/10 Market Commentary

2010-01-12T08:50:00.001-08:00

Tuesday's bond market has opened well in positive territory following a negative open in stocks and disappointing corporate earnings news. The stock markets are down as investors prepare for the possibility of a weak earnings reporting season. The Dow is down 24 points while the Nasdaq has fallen 18 points. The bond market is currently up 23/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.

November's Goods and Services Trade Balance report was posted this morning, showing a larger than expected $36.4 billion trade deficit. Analysts were expecting to see a $34.5 billion deficit, but this data is the week's least important and does not carry the influence to heavily affect mortgage pricing. Therefore, its impact on today's rates has been minimal.

There is no relevant data scheduled for release tomorrow morning. However, the Federal Reserve will post its Fed Beige Book report at 2:00 PM ET tomorrow . This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises.

The first of this week's two important Treasury auctions is tomorrow also. The Treasury will sell 10-year Notes and will post results at 1:00 PM ET. If there is a strong demand for the Notes, we should see the bond market move higher during afternoon trading. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates.

This week also kicks off the quarterly earnings season. Alcoa, who is usually the first Dow component company to report each quarter, gave investors dis appointing results after the close yesterday. This has led to concern about results from other big-name companies in the coming weeks. That has some investors shifting funds from stocks (expecting stock prices to fall further as more disappointing results are announced) into bonds as a safe-haven. This is good news for the bond market, at least temporarily and could lead to further improvements in mortgage rates if the pattern continues.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

01/08/10 Market Commentary Update 2:00 PM

2010-01-08T12:33:00.000-08:00

Friday's bond market has opened in positive territory following this morning's release of December's employment data. The stock markets are mixed with the Dow down 24 points and the Nasdaq up 6 points. The bond market is currently up 5/32, but we will likely see little change in this morning's mortgage rates due to volatility in bonds late yesterday.

Today's big news came from the Labor Department, who reported that the U.S. unemployment rate held at 10.0% and that 85,000 jobs were lost last month. The unemployment was expected to be unchanged, but the lost payrolls were worse than many had thought. The report also revealed a relative minor upward change in November's payrolls, revising from a loss of 11,000 to a gain of 4,000 jobs. But even with that revision, December's loss indicates that the employment sector was weaker than many had thought.

The third important reading of the report- average hourly earnings, matched forecasts with a 0.2 % increase. Overall, this report can be considered favorable for the bond market, especially since recent Fed comments have hinted at concern about the labor market. It is one of the factors why the Fed has been so hesitant to even consider raising short-term interest rates at recent meetings. This should bode well for bonds and lead to improvements in mortgage rates in the immediate future, unless we get contradictory economic data.

Next week is fairly active in terms of relevant economic reports and events, but the most important data comes the latter part of the week. There is nothing relevant scheduled to be posted Monday, so look for the stock markets and any weekend news to be the biggest influence on changes to mortgage rates. We will get important readings on consumer spending and inflation at the consumer level of the economy late in the week in addition to a couple of important Treasury auctions. Look for more details on next week's events in Sunda y's weekly preview.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

01/08/10 Market Commentary

2010-01-08T09:09:00.000-08:00

Thursday's bond market has opened flat as investors wait for tomorrow's major economic news. The stock markets are not showing much direction either with the Dow up 1 point and the Nasdaq down 8 points. The bond market is currently up 1/32, but we should still see an increase of approximately .250 of a discount point in this morning's mortgage rates due to weakness yesterday.

The Labor Department said this morning that 434,000 new claims for unemployment benefits were filed last week. This was a little lower than forecasts, but not enough to affect the markets or mortgage pricing.

Yesterday's FOMC minutes did give us some interesting insight to the Fed's current thought process and concerns. It appears that there is some concern whether more efforts will be need to keep the economy from stalling again. There was particular concern about the housing market and if more action will be needed to keep lending rates low. That could bode well for mor tgage shoppers since the last time the Fed announced they were buying bonds targeted at the housing market, mortgage rates dropped significantly. Another round of buying by the Fed could have similar results. I believe we will hear more about this option in the coming weeks and months.

Tomorrow's only relevant data is the big news of the week. The Labor Department will post Decembers employment figures early tomorrow morning. The Employment report is considered to be one of the most important monthly releases we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Its results are expected to heavily influence the markets and mortgage rates.

The latest forecasts are calling for no change in the national unemployment rate, keeping it at 10.0%. Analysts are now expecting to see a decline of 35,000 payrolls from November's level with earni ngs rising 0.2%. If we see weaker than expected results, mortgage rates should improve tomorrow morning. However, stronger than expected readings will likely fuel a stock market rally and push mortgage rates higher.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2010

Market Commentary 12/24/09

2009-12-24T08:33:00.000-08:00

Thursday's bond market has opened in negative territory following the release of mixed economic news and early stock gains. The stock markets are showing relatively minor gains with the Dow up 46 points and the Nasdaq up 10 points. The bond market is currently down 6/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point compared to yesterday's morning rates.

The Commerce Department announced early this morning that new orders for durable goods rose 0.2% last month. This was lower than the 0.5% increase that was expected, however, if more volatile transportation-related orders were excluded, we would have seen a 2.0% increase. Analysts were expecting that reading to rise only 1.1%. The two readings more or less wash each other out, minimizing the impact they will have on today's mortgage rates.

Also released this morning was last week's unemployment figures. The Labor Department reported that 452,000 new claims for unemployment benefits were filed last week. This was a lower total than the 470,000 that was expected, but since this data tracks only a single week's worth of claims its influence on bond trading and mortgage rates will be minimal.

This will be the last blog for 2009, as I am traveling for the holidays. I will share with you again beginning 1/4/2010. Happy Holidays!

The stock and bond markets will close early today ahead of the Christmas Day holiday and will remain closed Friday. They will reopen Monday morning for regular trading hours. There will be no update to this report tomorrow but Sunday's weekly preview will be on schedule.

I would like to take this opportunity to wish you and yours a happy and safe holiday.

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 between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float 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 2009

Market Commentary 12/23/09

2009-12-23T08:54:00.000-08:00

Wednesday's bond market has opened in positive territory after this morning's economic data gave us favorable results. The stock markets are mixed with the Dow down 11 points and the Nasdaq up 5 points. The bond market is currently up 11/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount point.

November's Personal Income and Outlays report was the first of today's three releases. It showed that personal income rose 0.4% last month while spending rose 0.5%. Both of these readings were below forecasts, indicating that consumer ability to spend and their actual spending was not as strong as thought. This is fairly good news for bond and mortgage rates. They still posted strong increases that point towards a strengthening economy, but since they fell short of expectations we can consider the readings positive for bonds.

The second report also gave us a bit of good news. The University of Michigan revise d their Index of Consumer Sentiment for December, posting a 72.5 reading that was lower than the previous estimate of 73.4. Current forecasts were calling for a reading of 73.8. This index measures consumer confidence, which is relevant to the markets because falling confidence usually means consumers are less apt to make large purchases in the near future. Slowing consumer spending indicates slower economic growth and makes bonds more attractive to investors.

The last report of the day also gave us results that were positive for bonds and mortgage rates, but since this was the week's least important report its impact on rates has been minimal. November's New Home Sales report revealed an 11.3% decline in sales of newly constructed homes. This was a huge difference from forecasts and hints that part of the housing sector is not stable yet.

Tomorrow's only important data is November's Durable Goods Orders that will be posted early morning. This data g ives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years. Analysts are expecting the report to show a 0.5% increase in new orders. A decline in orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should drive mortgage rates lower. However, a larger than expected rise in orders could lead to mortgage rates moving higher early tomorrow.

The stock and bond markets will close early tomorrow ahead of the Christmas Day holiday and will remain closed Friday. They will reopen Monday morning for regular trading hours. I strongly suspect that trading will be thin tomorrow as many firms keep only a skeleton staff on Christmas Eve. This will likely be the same for many mortgage companies also, so it is highly unlikely to see any afternoon revisions to mortgage rates tomorrow.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2009

Market Commentary 12/22/09

2009-12-22T14:21:00.001-08:00

Tuesday's bond market is down again as yesterday's selling continues into this morning's trading. The stock markets are showing gains and are contributing to the early weakness in bonds. The Dow is currently up 51 points while the Nasdaq has gained 11 points. The bond market is currently down 15/32, which will likely push this morning's mortgage rates higher by approximately .375 - .500 of a discount point.

The first report of the week was the final revision to the 3rd Quarter GDP. It showed a downward revision to 2.2% form 2.8% that was announced last month. This means that the economy grew at a slower pace during the third quarter than previously thought. That can be considered good news for bonds and mortgage rates, but since this data is old at this point and we will get the initial reading of this quarter next month, its impact on trading and mortgage rates has been minimal. Had we seen this much of a variance in either the initial or first revision, mortgage rates likely would have moved lower as a result of the news.

November's Existing Home Sales report was released late this morning. The National Association of Realtors reported that home resales rose 7.4% last month, exceeding forecasts by a wide margin. This follows a 10% spike in October, indicating that the housing sector is stronger than many had thought. However, it is believed that the biggest force behind the sales is the first time homebuyer tax incentive. A one time credit such as that tends to temporarily boost home sales and is not a reliable indicator of underlying strength. In other words, where will sales be once the credit is no longer available? That remains to be seen, but stock traders are taking the news as positive, which has made bonds less attractive to investors.

Tomorrow brings us the release of three reports. The first is November's Personal Income and Outlays data. It will give us an important measurement of con sumer ability to spend and current spending habits. Since consumer spending makes up two-thirds of the U.S. economy, any related data usually has a noticeable impact on the financial markets and mortgage rates. Current forecasts are calling for a 0.5% increase in income and a 0.7% increase in spending. If this report reveals weaker than expected readings, we should see the bond market improve and mortgage rates drop slightly tomorrow morning.

The second report of the day comes late morning when the revised University of Michigan Index of Consumer Sentiment for December is posted. Current forecasts are calling for a small upward revision from the preliminary reading of 73.4. This is fairly important because rising consumer confidence indicates that consumers may be more apt to make large purchases in the near future. An unexpected upward revision could lead to slightly higher mortgage rates tomorrow.

The last report of the day is November's New Home Sal es. It is this week's least important report and is unlikely to influence mortgage rates. It is the sister report to today's Existing Home Sales report but tracks only approximately 15% of all home sales in the U.S. Accordingly, I don't believe its results will have much of an influence on tomorrow's mortgage rates.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2009

12/17/09 Market Comentary

2009-12-17T08:59:00.000-08:00

Thursday's bond market has opened in positive territory following a weak open in stocks. The stock markets are reacting to overseas losses and concerns about the economy after yesterday's FOMC comments. The Dow is currently down 98 points while the Nasdaq has lost 23 points. The bond market is currently up 17/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount compared to yesterday's morning rates.

The Labor Department gave us last week's unemployment figures early this morning. They announced that 480,000 new claims for unemployment benefits were filed last week. This was good news for bonds because it was a higher number of claims than was expected. However, this data usually has little impact on mortgage rates because it tracks only a week's worth of new claims.

Late this morning, the Conference Board posted their Leading Economic Indicators (LEI) for November. It showed a 0.9% increase, meanin g that they think economic activity will be stronger over the next several months than many analysts had thought. This can be considered negative news for bonds, but since this is only a moderately important report, its impact on bond trading and mortgage rates has been minimal.

There is no relevant economic data scheduled for release tomorrow. We likely will see plenty of movement in the stock markets tomorrow as a result of option expirations. Therefore, we cannot rely on stocks to give direction to bonds since the movement in the major stock indexes will be due more to the expirations than direct concerns or optimism about the economy. In other words, it will likely be a directionless day for bonds tomorrow unless something unexpected occurs.

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 between 8 and 20 days... Float if my closing was tak ing place between 21 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 all/any other borrowers.
©Mortgage Commentary 2009

12/07/09 Market Commentary

2009-12-07T11:49:00.000-08:00

Monday's bond market has opened in positive territory, recovering part of Friday's sell-off. The stock markets are showing modest gains with the Dow up 20 points and the Nasdaq up 3 points. The bond market is currently up 8/32, which should improve this morning's mortgage rates by approximately .250 of a discount point from Friday's morning rates.

This week is fairly light in terms of the number of economic releases scheduled for release. There are only three on the agenda but one of them is considered to be very important and can heavily influence the markets and mortgage pricing. In addition, there are two Treasury auctions the middle part of the week that may hurt or help boost bond prices, depending on how strong of a demand there is for the sales. Since all of the relevant data is scheduled for release Thursday and Friday, the most movement in rates will likely be the middle or latter part of the week.

Fed Chairman Bernanke will be speaking t o the Economic Club of Washington D.C. at noon today. This is not considered to be an important speech and likely will not influence mortgage rates. However, whenever he speaks publicly, the possibility does exist that his words could rattle or rally the markets. I am not concerned about this one and don't feel there should be much attention placed on it.

There is no relevant economic news scheduled for release today, tomorrow or Wednesday. October's Goods and Services Trade Balance report will be posted early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week's least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don't expect it to affect mortgage pricing.

Overall, expect to see a pretty volatile second half of the week with the biggest moves in mortgage pricing likely to come Wednesday or Friday. Friday's Retail Sales report can cause a grea t deal of movement in rates, but Wednesday's Treasury auction may also help determine if rates will close the week higher or lower than tomorrow's opening levels. It will also be interesting to see if bonds extend Friday's selling into tomorrow's trading or if they recover some of those losses. This looks to be one of those weeks that maintaining contact with your mortgage professional would be wise.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2009

12/6/09 Market Commentary

2009-12-07T06:05:00.000-08:00

This week is fairly light in terms of the number of economic releases scheduled for release. There are only three on the agenda but one of them is considered to be very important and can heavily influence the markets and mortgage pricing. In addition, there are two Treasury auctions the middle part of the week that may hurt or help boost bond prices, depending on how strong of a demand there is for the sales. Since all of the relevant data is scheduled for release Thursday and Friday, the most movement in rates will likely be the middle or latter part of the week.Fed Chairman Bernanke will be speaking to the Economic Club of Washington D.C. at noon tomorrow. This is not considered to be an important speech and likely will not influence mortgage rates. However, whenever he does speak publicly, the possibility does exist that his words could rattle or rally the markets. I am not concerned about this one and don't feel there should be much attention placed on it.The two important Treasury auctions are the 10-year Note sale Wednesday and the 30-year Bond sale Thursday. Wednesday's auction is the more important of the two events and will likely influence mortgage rates more. Results of each sale will be posted at 1:00 PM ET. If they were met with a strong demand from investors, particularly international buyers, we should see afternoon strength in bonds and improvements to mortgage pricing those days.There is no relevant economic news scheduled for release tomorrow, Tuesday or Wednesday. October's Goods and Services Trade Balance report will be posted early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week's least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don't expect it to affect mortgage pricing. The most important data of the week comes early Friday morning with the release of N ovember's Retail Sales report. This data is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. Current forecasts call for it to show a 0.7% increase in sales from October's levels. If it reveals weaker than expected sales, the bond market should thrive and mortgage rates should fall as a result. A stronger than expected reading could fuel stock market gains and push mortgage rates higher Friday morning. Also Friday is the release of December's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly. However, with the Retail Sales data report before this data, I don't expect it to affect mortgage rates much. It is expected to show a reading of 6 8.5, which would be an increase from last month's final reading.Overall, expect to see a pretty volatile second half of the week with the biggest moves in mortgage pricing likely to come Wednesday or Friday. Friday's Retail Sales report can cause a great deal of movement in rates, but Wednesday's Treasury auction may also help determine if rates will close the week higher or lower than tomorrow's opening levels. It will also be interesting to see if bonds extend Friday's selling into tomorrow's trading or if they recover some of those losses. This looks to be one of those weeks that maintaining contact with your mortgage professional would be wise.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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2009

12/03/2009 Market Commentary

2009-12-03T11:05:00.000-08:00

Thursday's bond market has opened in negative territory following the release of unfavorable economic news. The stock markets are mixed again with the Dow down 25 points and the Nasdaq up 3 points. The bond market is currently down 13/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point over yesterday's morning rates.The 3rd Quarter Productivity revision gave us a lower level of productivity than previously thought and fell short of forecasts. The 8.1% annual rate of worker productivity growth can be considered negative new for bonds because the preliminary estimate stood at 9.5% and forecasts for today's revision were 8.5%. That is still a healthy rate of productivity, but the fact that it fell short of expectations means it is bad news for bonds.The Labor Department also gave us news that was not so good for bonds and mortgage rates. They reported that 457,000 new claims for unemployment benefits were filed last week. This was a lower total than the 480,000 that was expected and their lowest total since September of last year, meaning the employment situation may be stronger than thought. However, this data usually does not carry too much weight because it tracks only a single week's worth of new claims. Tomorrow's monthly report is a different story though.Also worth noting is today's Senate confirmation hearing for Fed Chairman Bernanke. I don't think anything said during today's hearing will significantly affect the markets or mortgage rate. He has stated that the economy is coming out of the recession but that there is still more work to be done. Despite some early barbs in the hearing, there is little doubt that he will be confirmed for another term four-year term.We will here again from the Labor Department tomorrow morning when they post November's Employment report. This is arguably the most important monthly report we se e. It is comprised of many statistics and readings, but the most important ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for no change in the unemployment rate of 10.2%, payrolls down approximately 125,000 and an increase of 0.2% in average earnings. An ideal scenario for mortgage shoppers would be a higher unemployment rate than 10.2%, a larger decline in jobs and no change in the earnings reading. Also scheduled for release tomorrow is the October's Factory Orders report. This data is similar to last week's Durable Goods Orders release by giving us a measurement of manufacturing sector strength, except this one includes orders for both durable and non-durable goods. This data usually isn't a major influence on bond trading, but there is little chance of it impacting mortgage rates this tomorrow because the Employment report is an extremely important report. Analysts are expecting to see little change in new orders from September to October.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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2009

12/02/09 Market Update

2009-12-02T12:42:00.001-08:00

INDIANAPOLIS MORTGAGES WEBSITE

Wednesday's bond market has opened flat with no relevant economic news scheduled for release this morning. The stock markets aren't influencing bond trading either with the major indexes mixed. The Dow is currently down 10 points and the Nasdaq up 15 points. The bond market is nearly unchanged from yesterday's close, but we will still likely see an increase in this morning's mortgage rates of approximately .250 of a discount point due to weakness late yesterday.

Today's only relevant report comes during afternoon trading. The Fed Beige Book will be released at 2:00 PM ET today. This report, which is simply named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises.

Tomorrow morning brings us the release of the revised 3rd Quarter Productivity report. T his index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn't necessarily bad for the bond market. It is the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 8.6%, down from the previous estimate of 9.5%.

We also get weekly unemployment figures from the Labor Department tomorrow morning. They are expected to say that 480,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week, but unless the total varies greatly from this forecast I don't believe it will have much of an impact on tomorrow's mortgage rates.

If I were considering financing/refinancing a home, I would.... L ock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.

12/1/09 Market Comentary

2009-12-01T09:16:00.001-08:00

Tuesday's bond market has opened in negative territory despite weaker than expected economic results from a very important report. Stock market gains are likely the cause of this morning's bond weakness. Stocks are rallying with the Dow up 133 points and the Nasdaq up 30 points. The bond market is currently down 11/32, which should push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.

Today's big news came from the Institute for Supply Management (ISM) who posted their manufacturing index for November. They announced a reading of 53.6 that fell short of the 54.9 that was expected, meaning manufacturer sentiment was weaker than thought. This is supposed to be good news for bonds and mortgage rates because a weakening manufacturing sector makes a broader economic recovery less likely and eases inflation concerns that hurt bond prices. Unfortunately for mortgage shoppers, today's data is not influencing trading as much as it usually does.

The Fed Beige Book will be released at 2:00 PM ET tomorrow and is the day's only relevant data. This report, which is simply named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises.

The next piece of data that we need to be concerned with comes Thursday morning with the release of the revised 3rd Quarter Productivity report. This index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn't necessarily bad for the bond market. It is the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 8.6%, down from the previous estimate of 9.5%.

I still believe Friday is the day to watch out for. It brings us the almighty monthly Employment report. Its results can erase the entire week's gains or losses in the hour of trading following its release. It appears that my concern about bonds meeting resistance at current levels was accurate. This will probably remain the case until we get a significant catalyst to break through these levels. Friday's report certainly has the potential to do this, assuming that the data is favorable to bonds. Until then, it is prudent to remain cautious towards rates.

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... Float if my closing was taking place between 21 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 all/any other borrowers.
©Mortgage Commentary 2009

11/30/09 Mortgage Market Activity

2009-11-30T13:02:00.000-08:00

Monday's bond market has opened in negative territory, unable to extend Friday's rally. The stock markets are relatively calm with the Dow up a few points and the Nasdaq down a few points. The bond market is currently down 8/32, which may minimize the expected improvements in this morning's mortgage rates. However, I am still expecting to see a small improvement in this morning's mortgage rates compared to Wednesday's pricing.

There are five pieces of economic news that may affect mortgage rates this week, with data scheduled for release each day except today. The fact that the bond market was unable to follow-thru on Friday's rally concerns me that we may have some resistance in breaking current levels in the bond market. That shifts the risk versus reward calculations for locking or floating a rate, at least short-term. This doesn't necessarily mean that I feel rates will move higher in the immediate future. It simply means that the risk of floating a rate outweighs the potential gain of doing so. With little possible reward, why take the risk?

The Institute for Supply Management (ISM) will post their manufacturing index for November late tomorrow morning. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a decline in sentiment from October to November. October's reading was previously announced as 55.7. A weaker reading than the expected 54.8 would be good news for the bond market and mortgage rates. A reading below 50 means that more surveyed trade executives felt business worsened during the month than those who felt it had improved. The lower the reading the better the news for bonds because waning sentiment indicates a slowing manufacturing sector and makes a broader economic recovery less likely.

Overall, the most important day this week is Friday with monthly employment figures being released, but we may also see sizable movement in rates tomorrow. If Friday's Employment report reveals stronger than expected results we may see rates spike higher that morning, possibly erasing any gains during the week. It will probably be the key to rates moving lower or higher for the week. I suspect it will be a fairly active week for the markets and mortgage pricing, so it would be prudent to maintain contact with your mortgage professional 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... Float if my closing was taking place between 21 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 all/any other borrowers.

Friday 11/17/09

2009-11-27T12:05:00.001-08:00

Friday's bond market has opened in positive territory due significant selling on stocks during early trading. The stock markets are posting sizable losses with the Dow down 152 points and the Nasdaq down 35 points. The bond market is currently up 11/32, but I am expecting to see little change in mortgage rates since many lenders are closed or will reflect today's news in Monday's pricing.

Despite the current losses in stocks, the Dow and Nasdaq are both well off earlier lows. The Dow had fallen as much as 233 points while the Nasdaq was down by as much as 62 points. This morning's weakness in stocks came from overseas news that Dubai may not be able to pay debt payments that are coming due. This has rattled several international markets as it brought back fears about economic stability.

The selling in stocks has helped boost bond prices this morning as investors seek safe-haven from the volatility. But this may be just a knee-jerk reaction and short-lived as we have already seen the major stock indexes recover a good portion of earlier losses. Therefore, I would not consider this to be a breakthrough morning for bonds or mortgage rates. With many traders at home for the holiday weekend, the early reaction to the news may be more a result of thin trading than the significance that the news will actually have on our economy and markets. In other words, lets wait until Monday's full day of trading to see just how much of an impact this will have on our markets and mortgage pricing.

Wednesday's 7-year Note auction went pretty well, meaning there still is an appetite for U.S. debt. This is needed if we want mortgage rates to fall below current levels. The 10-year Note sale, which is a better indication of investor interest in longer-term securities such as mortgage-related bonds, will be held the week after next. That sale will give us an important measurement of appetite for mortgage-related debt that could push mortgage rates noticeably lower than current levels.

The stock markets will close at 1:00 PM ET today while the bond market will close at 2:00 PM. With many lenders closed today or on a skeleton staff, I don't think we will see much change in mortgage rates despite today's market volatility. However, we can expect a downward change in Monday's morning pricing if the markets hold current levels.

Next brings us the release of several important economic reports. There is relevant data being posted each day except Monday. Some of the key reports are the ISM Manufacturing index and November's Employment report. Look for more details on next week's event in Sunday's weekly preview.

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 between 8 and 20 days... Float if my closing was taking place between 21 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 all/any other borrowers.

©Mortgage Commentary 2009

Rate Lock Advisory - Wednesday 11/25/09

2009-11-25T20:44:00.000-08:00

Wednesday's bond market has opened has opened in negative territory following the release of stronger than expected economic data. The stock markets are showing minor gains with the Dow up 22 points and the Nasdaq up 6 points. The bond market is currently down 8/32, but we still should see an improvement of approximately .250 of a discount point in this morning's mortgage rates due to strength in bonds late yesterday.

The first of today's four relevant reports was October's Durable Goods Orders that showed a 0.6% decline in new orders for big-ticket items. This was much lower than the 0.5% that was expected, but this particular report is known to show quite a bit of volatility from month-to-month. So a wide variance does not necessarily mean a big change to mortgage rates, but this morning's news can be considered favorable for bonds and mortgage pricing.

The second report of the day was October's Personal Income and Outlays data. It revealed a 0.2% rise in income that was expected, but a 0.7% increase in spending that exceeded forecasts. That means consumers spent more than many had thought, increasing the possibility of economic growth. This is bad news for bonds and mortgage rates because an expanding economy usually raises inflation concerns and makes mortgage-related bonds less attractive to investors.

Church Financing Information

2009-11-25T08:20:00.000-08:00

COMMERICAL LOAN: CHURCH FINANCING AVAILABLE

Current Church Financing Offerings:

5 year fixed rate, 20 year amortization = 5.85%
5 year fixed rate, 25 year amortization =6.00%
20 year fixed loan with no balloon = 6.50%
We offer 30 year amortizations on some loans.
We do not need personal guarantees on church loans.
Disclaimer***These rates are not available in all areas. Not every church will qualify for a loan. Minimum loan amount of $75,000 maximum loan amount of $15,000,000Rates and terms subject to change without notice.

OUR PROCESS

We offer loans on most property types for churches including:Sanctuary, parsonage, fellowship halls, and almost any other property type for a church. We offer financing for the purchase, refinance, renovation and construction of church properties. Our process is simple and quick. Complete our one page application (Down Load Here). Send it back via email to Rnail@residentialgroup.net or fax it to 1-866-551-3963 to the attention of Randy Nail. Please include the last 3 years financial statements for the church plus year to date financial statements if available.

Joke of the Month
At the end of the age when all the believers were standing in line waiting to get into heaven, God appeared and said, "I want all the men to form two lines. One line will be for the men who were the true heads of their households. The other will be for the men who were dominated by their wives."God continued, "I want all the women to report to St. Peter."The women left and the men formed two lines. The line of men who were dominated by their wives was seemingly unending. The line of men who were the true head of their household had one man in it.God said to the first line, "You men ought to be ashamed or yourselves. I appointed you to be the heads of your households and you were disobedient and have not fulfilled your purpose. Of all of you, there is only one man who obeyed me. Learn from him."Then God turned to the lone man and asked, "How did you come to be in this line?"The man replied, "My wife told me to stand here."