Monday, October 26, 2015 - Article by: James Brooks - Polaris Home Funding Corp -
By James Brooks
The bond market is up 9/32 (2.05%), we should today's mortgages rates decrease by .125 of a point.
Today had a single piece of economic data released. September's New Home Sales was posted at 10:00 AM ET today. The Commerce Department said that sales of newly constructed homes fell 11.5% last month, falling well short of expectations. This indicates the new home portion of the housing sector was softer than many had thought last month, making the data favorable for bonds and mortgage rates.
The rest of the week brings us the release of six more economic reports and two Treasury auctions in addition to another FOMC meeting. We have data or other events that are expected to influence mortgage rates set every day, so we could see plenty of movement in rates this week. The data scheduled this week ranges from minor to extremely important, meaning some reports will have a much bigger impact on trading than others.
Tomorrow has two of those reports, starting with the Durable Goods Orders report for September at 8:30 AM ET. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Analysts are currently calling for a decline in new orders of approximately 1.3%. If we see a large increase in orders, mortgage rates will probably rise as bond prices fall. On the other hand, a significantly larger than expected decline should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast. Therefore, a small variance from forecasts likely will have little effect on tomorrow's bond trading or mortgage pricing.
October's Consumer Confidence Index (CCI) will be released at 10:00 AM ET tomorrow. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show a drop in confidence from last month's 103.0 reading. That would mean that consumers did not feel as good about their own financial and employment situations as they did last month, indicating they are less likely to make large purchases in the near future. That would be good news for the bond market because consumer spending makes up over two-thirds of our economy. Current forecasts are showing a reading of 102.5. The lower the reading, the better the news it is for mortgage rates.
Overall, it appears Wednesday or Thursday could be the most active day for mortgage rates while today was the best candidate for lightest. The importance of tomorrow and Friday's reports makes them likely to be active day also, although I suspect the most movement in rates will take place the middle days due to the FOMC meeting and GDP report. With some much data and other events relevant to mortgage rates scheduled this week, 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... Float if my closing was taking place over 60 days from now.
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