Mortgage Market Rate Update April 29, 2008

Where We’ve been:
Tuesday’s bond market has opened in positive territory despite a stronger than expected economic reading. The stock markets are showing early losses with the Dow down 50 points and the Nasdaq down 9 points. The bond market is currently up 10/32, which with yesterday’s late strength should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.

The Conference Board gave us April’s Consumer Confidence Index (CCI) late this morning, revealing a stronger than expected reading of 62.3. However, an upward revision to March’s reading has actually worked favorably for bonds. The difference between forecasts and the previous March reading is extremely close to the difference between today’s reading and the revised March reading. This means that even though confidence was a little higher than thought in March, it dropped as much as it was expected to in April. The result is little impact on bond trading or mortgage rates.

Where We’re At:
Tomorrow is going to be a very interesting day as brings us the release of two important reports along with the FOMC meeting results. The first is the preliminary version of the 1st Quarter Gross 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 tomorrow and therefore the mortgage market also. Analysts are expecting to see output at an annual rate of 0.5%. A smaller increase would be ideal for mortgage rates a sit would fuel recession concerns. But, a larger increase would almost certainly cause inflation concerns in the bond market that would push mortgage rates higher tomorrow morning.

The next 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 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 0.8%.

Where we’re Going:
This week’s FOMC meeting will began today but will not adjourn until tomorrow afternoon. It will likely adjourn with an announcement of another rate cut to key short term interest rates. Just how much of a reduction is open for debate. Look for another round of volatility following the 2:15 PM ET post-meeting statement.

Forecast:
If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… This is only an opinion of what one may 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.

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!

Mortgage Rate Update April 21, 2008

Where We’re At:
This week is fairly light in terms of economic news scheduled for release. There are four reports scheduled, but only one of them is likely to cause much movement in mortgage rates. Accordingly, there is a fairly decent possibility of seeing a fairly calm week in the mortgage market.

The week’s first piece of data is one of the least important of all four. The National Association of Realtors will post March’s Existing Homes Sales numbers Tuesday morning, which are expected to show a drop from February. A similar report to this one and actually the week’s least important data- March’s New Home Sales will be released Thursday 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.

Where we’re Going:
March’s Durable Goods Orders will be posted early Thursday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for a small increase in orders. A smaller than expected increase could help boost bond prices and cause mortgage rates to drop Thursday morning. However, a stronger than expected reading would indicate that the manufacturing sector is gaining strength quicker than many had thought. This would be negative news and would probably help drive mortgage rates higher.

Also Thursday is a 5-year Treasury Note auction. These sales sometimes bring volatility to the bond market ahead of the actual sales as investors prepare for them. However, that weakness is usually only temporary and will correct itself after the sale is complete as long as it was met with a decent demand from investors. If there was a strong demand, bond prices should rise during afternoon trading. But, lackluster interest could lead to weakness and upward revisions to mortgage rates.

Forecast: Overall, look for Thursday to be the most important day of the week with the Durable Goods report being posted and the Treasury auction. The rest of the week will likely be heavily influenced by the stock markets. If the major stock indexes continue to rally, bonds will likely suffer and mortgage will move higher. If stocks pull back, we could see mortgage rates move lower this week.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… This is only an opinion of what one may 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.

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!

Mortgage Rate Update April 16, 2008

Where We’ve been:
Yesterday afternoon’s weakness in bonds was mostly the result a sizable stock rally, but inflation concerns that were mentioned in the Fed Beige Book also contributed. The report showed that the economy continued to weaken and that prices paid for raw materials spiked since the last report. The higher costs for materials usually means higher prices passed on to consumers. That inflation threat is a concern to bond traders because inflation erodes the value of a bond’s future fixed interest payments and leads to selling in bonds. That translates into higher mortgage rates for borrowers.

The Labor Department released weekly unemployment claims, saying that 372,000 new claims for benefits were filed. This was up form the previous week, but was close to forecasts. Therefore, it also had no impact on this morning’s rates.

Where We’re At:Thursday’s bond market has opened down slightly as yesterday’s late weakness carried into this morning’s trading. The stock markets are showing losses with the Dow down 31 points and the Nasdaq down 15 points. The bond market is currently down 5/32, but weakness late yesterday will push this morning’s mortgage rates higher by approximately .375 of a discount point over yesterday’s morning rates.

Where we’re Going: There is no relevant data scheduled for release tomorrow. Look for the stock markets to be the biggest influence eon bond trading and mortgage rates. If stocks move higher, binds will likely fall and mortgage rates will inch up. If we see stock weakness, mortgage rates should improve tomorrow.

Forecast: Mortgage interest rates remain historically favorable and taking advantage of rates at these levels to lock in a low interest rate for years to come would be prudent. If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… This is only an opinion of what one may 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.

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!

L.A.Times: ‘Mortgage Payoff on Steroids’ with Randy Ramirez Contributing

So on Wednesday, April 9, 2008, the article I was interviewed for on the new Mortgage financing products was published in the Los Angeles Times, Business section front page. Although, previously being contacted by Telemundo and Tribune, as an avid Los Angeles Times Reader, this one was close to my heart! Well, although the interview was long, my published contribution resulted in a minor nod. But hey, to be considered is always an honor.

More importantly, the fact that the housing industry and property has received such bad press lately, its important to learn and understand the cutting edge ways that are out there on how to understand financing tools, what the affluent use, and if it is in everyones interest to use these as debt reduction vehicles (like cutting 10-15 years off your mortgage in a 2 year year period). If you ever are interested in discussing these items further, I am always available. I’ll let you read the article on the L.A. Times website….

L.A. Times: Business: Mortgage Payoff on Steroids, April 9, 2008

Mortgage Rate Update April 10, 2008

Where We’re At:
This week brings us the release of only two relevant economic reports in addition to the minutes from the last FOMC meeting and a Treasury auction. Both of the relevant reports are scheduled for release late in the week, so the most movement in rates may come the latter part of the week.

So far this week Mortgage prices are roughly unchanged, and aside from the WaMu news (opting out of the wholesale market) there is little news. The release of the minutes of the March 18th FOMC meeting, along with February’s pending home sales (expected to have decreased -1% following January’s unchanged) were as follows: Fed minutes release actually gave us favorable news. The Fed was clearly concerned about economic growth and likelihood of a recession during the last FOMC meeting. They indicated that the economic slowdown could continue well into next year, which surprised many analysts. This is generally good news for bonds because weak economic conditions make stock less appealing to investors. As a result, funds are shifted into bonds, leading to lower mortgage rates.

Where we’re Going:
Thursday’s bond market opened in positive territory but has since fallen into negative ground as stocks have gained strength. The stock markets are now showing noticeable gains with the Dow up 80 points and the Nasdaq up 30 points. The bond market is currently down 8/32, but we likely will see mortgage rates improve by approximately .125 – .250 of a discount points as a result of strength in bonds late yesterday and early this morning. We could see some weakness in bonds ahead of the sale as investing firms sell current holdings to prepare for it. This weakness is usually only temporary if the sales are met with a decent demand. The results of the sale will be posted at 1:00 PM ET. If the demand from investors was strong, the bond market could rally during afternoon trading, If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing tomorrow afternoon.leading to lower mortgage rates.

Forecast:
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…

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!