Friday, November 9, 2012 - Article by: James Brooks - Polaris Home Funding Corp -
By James Brooks
Friday's bond market has opened down slightly due to stronger than expected results in today's only economic news. The stock markets are showing minor gains with the Dow up 25 points and the Nasdaq up 17 points. The bond market is currently down 5/32, but we should still see an improvement of approximately .250 of a discount point in this morning's mortgage rates due to strength late yesterday.
Yesterday's 30-year Bond auction actually went very well. This was a bit surprising because Wednesday's 10-year Note sale did not, giving us little to be optimistic about in yesterday's auction. Still, several indicators used to measure investor demand pointed towards a high level of interest in the securities. Once the results of the sale were posted at 1:00 PM ET yesterday, bond prices rose and some lenders revised their pricing lower to reflect the gains.
The University of Michigan Index of Consumer Sentiment for November was posted late this morning, revealing a reading of 84.9. This was higher than the 83.0 that analysts were expecting, indicating surveyed consumers were more optimistic about their own financial situations than many had thought. That makes the data negative for bonds and mortgage rates because rising confidence usually means consumers are more apt to make a large purchase in the near future, fueling economic growth.
Next week brings us the release of several important pieces of economic data that may influence mortgage rates, including a highly important measurement of consumer spending and two key inflation readings. The bond market will be closed Monday in observance of the Veterans Day holiday but the stock markets will be open for trading. This means that many lenders will be closed Monday and those that may be open will likely use today's rates or won't accept lock agreements until the bond market reopens Tuesday morning.
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... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now.
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