Monday, December 2, 2013 - Article by: James Brooks - Polaris Home Funding Corp -
By James Brooks
The major stock indexes are starting the week mixed but calm with the Dow down 24 points and the Nasdaq up 2 points. The bond market is currently down 17/32, which should push this morning's mortgage rates higher by approximately .250 - .375 of a discount point.
Today's only relevant economic data was the Institute for Supply Management' (ISM) manufacturing index for November. They announced a reading of 57.3 at 10:00 AM ET that not only exceeded forecasts of a 55.5, but was an increase from October's 56.4 when forecasts were calling for a decline. This means that more surveyed business executives reported stronger conditions than did in October, indicating manufacturing sector growth. That makes the data negative for the bond market and mortgage pricing and caused bonds to extend their early morning losses.
There is nothing of importance scheduled for tomorrow, but we do have nine more relevant economic reports being posted over the last three days of the week. One of those is the almighty monthly Employment report that is highly influential on the financial and mortgage markets. A couple of the reports on the calendar aren't likely to cause a noticeable move in mortgage rates. However, most of the data is considered to be of moderate or fairly high importance and should be watched.
This morning's losses in the bond market have pushed the yield on the benchmark 10-year Treasury Note up to 2.80%. The recent upward trend is likely to continue in my opinion, until at least we get to Friday's key economic data. As previously mentioned on multiple occasions, 2.90 - 2.95% is a realistic target for the 10-year yield before we see a noticeable move lower. Since mortgage rates tend to follow bond yields, that would translate into higher rates for mortgage shoppers.
Overall, look for Friday to be the most active day of the week in terms of mortgage rate movement while tomorrow is likely to be the calmest. Between Wednesday and Friday, there is plenty of data being posted that may also affect mortgage rates. With so much on tap this week, there is plenty of opportunity to see large swings in the major market indexes and mortgage rates. Accordingly, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now.
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