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James Brooks

Mortgage Rates Move Lower 1-23-2012

Wednesday, January 23, 2013 - Article by: James Brooks - Polaris Home Funding Corp - Message

By James Brooks

Wednesday's bond market has opened in positive territory despite early stock gains. The major stock indexes are showing a little strength this morning with the Dow up 49 points and the Nasdaq up 8 points. The bond market is currently up 8/32, which with some late afternoon strength yesterday should improve this morning's mortgage rates by approximately .250 of a discount point over Tuesday's morning pricing.

There is nothing of relevance scheduled for release today. On days with no economic news or other reports to drive bond trading and mortgage rates, we usually look towards the stock markets for direction. However, with stocks in positive ground and bonds following suit instead of the opposite direction, it appears we can't rely on them either for guidance. On the other hand, bond strength usually means lower mortgage rates, so no reason for me to complain.

Tomorrow has two relatively minor pieces of economic data scheduled for release. The first will be at 8:30 AM ET when the Labor Department posts last week's unemployment figures. They are expected to announce that 356,000 new claims for unemployment benefits were filed last week. This would be a sizable increase from the previous week's 335,000 that surprised many people. The larger the number of new claims for benefits, the weaker the employment sector looks and the better the news it is for the bond market and mortgage rates. Although, since this report tracks only a single week's worth of initial claims, it usually takes a large variance from forecasts for the data to affect mortgage pricing.

December's Leading Economic Indicators (LEI) will be released at 10:00 AM ET tomorrow by the Conference Board, who is a New York-based business research group. It attempts to predict economic activity over the next several months, but since it is compiled and posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Tomorrow's release is expected to show a 0.5% increase, meaning the indicators are predicting a moderate increase in economic activity this spring. Theoretically, that would be bad news for mortgage rates because long-term securities such as mortgage-related bonds tend to do better in weaker economic conditions. However, as long as we don't see a much stronger than predicted increase, I don't think this data will have much of an influence on mortgage pricing.

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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