Weekly Mortgage Rate Update March 10, 2008

Where We’ve been:
Last weeks Market ended in an improvement by about .125 to mortgage rates after significant increases, leaving expectations for significant market movement this week. So this week brings us the release of four economic releases for the bond and mortgage markets to digest along with a 10-year Treasury Note auction. None of the important economic news is scheduled for release until Thursday. Two of the four reports are considered to be of high importance to the markets. This means that we will likely see the most movement in rates the latter part of the week.

Where We’re At:
The first piece of news comes Tuesday morning with the release of January’s Goods and Services Trade Balance. This report 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. Thursday brings the release of February’s Retail Sales data. This report 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. If we see a decline in sales, the bond market should rise and mortgage rates will likely fall.

Where we’re Going: The Labor Department will post February’s Consumer Price Index (CPI) early Friday morning. This index measures inflationary pressures at the consumer level of the economy. If the index shows a large increase, inflation concerns may rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates 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. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates.

Forecast:
Overall, it will likely be another active week in the mortgage market. Thursday or Friday both can be labeled as the most important day of the week. Either can lead to a significant change to mortgage pricing. Generally speaking, this week is definitely a good one to maintain contact with your mortgage professional if an interest rate has not been locked yet, particularly the latter part of the week. If I were considering financing/refinancing a home, I would…. Lock if my closing (refinance /Purchase) was taking place within 7 days… It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

If rates should fall lower or we revert to a recommendation to float, you’ll find out about it here at The Property Tip. So check back and check back often!