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!