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James Brooks

Mortgage Rates Move Higher After Christmas 12-26-2013

Thursday, December 26, 2013 - Article by: James Brooks - Polaris Home Funding Corp - Message

By James Brooks

The major stock indexes are extending the Christmas rally with the Dow up 53 points and the Nasdaq up 10 points. The bond market is currently down 2/32, but due to weakness Tuesday before the early closing, we should still see an increase of approximately .125 of a discount points in this morning's mortgage rates.

The Labor Department announced early this morning that last week's initial unemployment claims fell much more than expected. They said that 338,000 new claims for unemployment benefits were filed last week, down from the previous week's revised total of 380,000 and lower than forecasts of 350,000. This indicates that the employment sector was stronger than many had thought, making the data negative for the bond market and mortgage rates. Fortunately, this is only a weekly report and hasn't had much of an impact on this morning's trading or pricing.

Tomorrow has nothing scheduled for release that has the potential to affect the markets or mortgage rates. It will likely be another thin or light trading day with many traders still home for the holiday. The stock and bond markets will be open for a full day of trading but a move in any of the markets will probably be artificial and not something we should get too excited or be concerned about.

We saw a good example of what thin trading can do Tuesday between the time the economic data was posted and the early close. As traders sold small portions of their holidays ahead of the holiday, there weren't many buyers to complete the transaction. That magnified the selling and pushed yields higher than we likely would have seen on a regular trading day. We could see the same today and tomorrow with no major data or events to keep traders in the office. Monday will probably be a solid day of trading volume as investors prepare for the end of the year.

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... 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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