Tuesday, May 20, 2014 - Article by: James Brooks - Polaris Home Funding Corp -
By James Brooks
Today's bond market is currently up 1/32, but we will still see an increase in this today's mortgage rates of approximately .125 - .250 of a discount point due to weakness late yesterday.
More afternoon selling in bonds yesterday caused many lenders to revise their pricing higher during afternoon trading. That, coupled with this morning's open has the benchmark 10-year Treasury Note yield at 2.53%. We are still below what we could consider the recent established trading range, but up from the recent bottom of 2.47% that we saw last week. There is still plenty of room for it to move upward towards the 2.65 - 2.80% range that we were stuck in for so long. Since mortgage rates tend to follow bond yields, it would be prudent to proceed cautiously if floating an interest rate, at least until there is better definition of which direction we are heading.
With another uneventful day ahead of us in terms of relevant economic data scheduled for release or other events that may affect mortgage rates, look for stocks to drive bond trading and mortgage rates. Stock strength usually translates into bond weakness and higher mortgage rates, while stock selling often leads to lower rates. So, if the major stock indexes extend their early losses, we could see improvements to mortgage rates during afternoon trading.
There is nothing of importance scheduled to be posted again tomorrow morning, but the minutes of the last FOMC meeting will be released. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation or geopolitical concerns in the economy and their impact on economic growth. The goal is to form opinions about the Fed's next move regarding interest rates and their current bond-buying program (QE3). Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading tomorrow.
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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