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James Brooks

Good Day For Mortgage Rates 7-6-2015

Monday, July 6, 2015 - Article by: James Brooks - Message

By James Brooks

The bond market is up 19/32 (2.31%), which should improve today's mortgage rates by approximately .250 of discount point from Thursday's levels (markets closed Friday in observance of the Independence Day holiday).

Today has nothing of importance scheduled for release that we need to be concerned with. The financial situation in Greece is driving trading in the financial markets today, directly influencing today's mortgage pricing. The concern is that if Greece was to exit the Euro currency system, it would have a negative impact on the regional economy, possibly affecting our economic growth. That makes the news favorable for bonds and mortgage rates, but keep in mind that these geopolitical and financial flight to safety moves often reverse themselves very quickly. In other words,

if a bailout agreement is reached with Greece, we could see the bond market react strongly and in a way that is negative for mortgage shoppers.

The rest of the week has no relevant economic reports for the bond market to digest but we do have the minutes from the last FOMC meeting and two fairly important Treasury auctions taking place. Corporate earnings season begins this week, so we may see volatility in stocks as a result that often affects bond trading. Alcoa is expected to post their earnings after the market closes tomorrow, so it will have an impact on overnight and early morning trading Wednesday.

This company isn't necessarily important to gauging economic strength, but it is the first Dow component company that posts earnings each quarter. Since it is the first look into Dow-related earnings, it draws plenty of attention in the markets. Generally speaking, weaker corporate earnings translates into stock selling that makes bonds more attractive to investors. As bond prices rise, yields fall and mortgage rates usually follow bond yields.

Overall, it is a fairly easy decision to label today as the most important due to the noticeable reaction to Greece's vote. As for the calmest day, it could be Friday unless the Greek situation takes another turn or Janet Yellen says something surprising in her speaking engagement. In between we should see plenty of volatility in the markets and movement in mortgage rates. Therefore, it is highly recommended 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... 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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