Monday, December 9, 2013 - Article by: James Brooks - Polaris Home Funding Corp -
By James Brooks
The bond market is currently up 12/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point over Friday's morning pricing.
There is nothing of importance scheduled for release today in terms of economic data. However, there are several afternoon speaking engagements by Federal Reserve members. The topics of a couple of the speeches are related to the economy, so analysts and traders will be watching them for any surprises or tidbits that could alter forecasts of what future moves the Fed may make and when they will be made. Often these appearances are non-factors because they are related to banking rules or other boring topics. Since some of today's speeches look to be directly related to current and future economic conditions, we could see one or more of them affect afternoon trading and mortgage pricing.
The rest of the week has only two relevant monthly economic reports scheduled for release in addition to a couple of Treasury auctions that have the potential to influence mortgage rates. Both of the economic releases are considered highly important though and the Treasury auctions are the more important set of auctions we regularly deal with, so despite the lack of a busy calendar we still should see a fairly active week in rates.
We have Treasury auctions to watch Wednesday and Thursday while the economic data comes Thursday (November's Retail Sales) and Friday (November's Producer Price Index). I suspect Thursday will be the most active day of the week with the consumer spending data and 30-year Bond auction, but Friday's data can also cause movement in rates. The calmest day will likely be tomorrow, unless something unexpected happens. Overall, it will probably be a calmer week than last week in terms of mortgage rate movement although we still should see rate changes multiple days.
The benchmark 10-year Treasury yield closed last week at 2.88% after touching 2.92% immediately after November's stronger than forecasted Employment report was posted. I believe this week will help determine if that yield will break above 2.90% again or retreat towards 2.62%. Since mortgage rates tend to follow bond yields, the latter would be preferred by mortgage shoppers. Because the 2.92% on Friday was momentarily, I am hesitant to rely on it as a basis in switching to Float recommendations. Therefore, I am maintaining the conservative stance towards locking or floating an interest rate for the time being.
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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