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James Brooks

Another Good Day For Mortgage Rates 6-27-2016

Monday, June 27, 2016 - Article by: James Brooks - Polaris Home Funding Corp - Message

By James Brooks

The bond market is currently up 22/32 (1.47%), which should improve today's mortgage rates by approximately .250 of a discount point.

There is nothing scheduled for release today that is relevant to mortgage rates. We are seeing the markets trade based almost exclusively on last week's vote in Britain to break away from the European Union. Over the weekend theories developed that have some people believing other countries may follow suit, threatening the union altogether. That has helped fuel another day of stock selling and bond buying.

The rest of the week has only four pieces of monthly or quarterly economic data that we will be watching with one being considered highly important. However, there is good reason to believe that this data will not be affecting the markets nearly as much as it usually does do to the Britain/EU situation.

Tomorrow has two of the reports set for release. The first is the final reading to the 1st Quarter Gross Domestic Product (GDP) at 8:30 AM ET tomorrow morning. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this particular data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings.

Market participants are looking more towards next month's release of the current quarter's initial GDP reading. Last month's first revision showed a 0.8% annual rate of growth in the GDP. Tomorrow's revision is expected to show a 1.0% rate of expansion, meaning the economy was slightly stronger than previously thought during the quarter. A larger increase in the GDP would be considered negative for rates as it means stronger economic activity.

June's Consumer Confidence Index (CCI) will be posted at 10:00 AM ET tomorrow. This data is relevant to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial and employment situations, they are more apt to make large purchases in the near future, fueling economic growth. If it shows a sizable increase in confidence from last month, we can expect to see a negative reaction in bonds and mortgage rates. Current forecasts are calling for a reading of 93.1, up from last month's 92.6 reading. The lower the reading, the better the news it is for bonds and mortgage rates.

Overall, I am expecting to see another active week in the financial and mortgage markets. The most important day could be any day due to stock movement or overseas news, particularly regarding other countries that may consider following Britain's lead to break away from the European Union. Friday has the most important report in the ISM release and it also has an early close in the bond market ahead of the Independence Day Holiday. Still, because of current events and the impact they could have on everything from Fed moves, global economics and stocks just to name a few, it would be highly prudent to maintain contact with your mortgage professional if still floating an interest rate.

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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