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!