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Rate Lock Advisory - Friday Jul. 22nd



Friday’s bond market has opened in positive territory, recovering some of yesterday’s losses. The stock markets are mixed with the Dow down 34 points and the Nasdaq up 7 points. The bond market is currently up 10/32, but we will likely see little change in this morning’s mortgage rates due to weakness late yesterday.

There is nothing of importance scheduled for release today. Another strong day in stocks yesterday led to more bond weakness. The selling accelerated during afternoon hours, causing the benchmark 10-year Treasury Note to close above 3.00%. As mentioned here over the past couple days, this move was not exactly surprising to me. I still believe that, at least at the moment, 3.00% is more of a floor than a ceiling. If this proves to be correct, we will likely see it move higher in the immediate future. Since mortgage rates tend to follow bond yields, this means higher rates for mortgage shoppers. This morning’s early gains pushes the yield down to 2.98%, so the next couple of trading days will help us determine which direction rates are heading.

The rest of the day may bring additional volatility as investors close out another active week in stocks and bonds. If the major stock indexes move higher during afternoon trading, we may see more bond selling and upward revisions to mortgage rates later today. However, if stocks lose ground as the day progresses, bond prices could move higher and mortgage pricing lower. I would not be completely surprised to see the week wrap up with another change to mortgage pricing.

Next week brings us a handful of relevant economic reports, most of which are more important than any of this week’s economic reports were. We also will have two Treasury auctions to watch that may influence mortgage rates. None of them are scheduled for Monday, so any weekend news from overseas or our own debt limit issue will help drive trading and mortgage pricing that day. The important events begin Tuesday morning, 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... 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.

Posted by Anthony J. Hood on July 22nd, 2011 9:33 AMPost a Comment (0)

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