Mortgage Commentary

[Adam in CO]

Updated on Jun 4 2007 12:40PM EST



Monday’s bond market has opened in positive territory following early stock losses. The stock markets have opened in negative territory this morning. The Dow is currently down 20 points while the Nasdaq has slipped 2 points. The bond market is currently up 5/32, but we likely will see little change in mortgage rates this morning due to weakness in bonds late Friday.

The Commerce Department reported late this morning that April's Factory Orders rose 0.3%. This was lower than expected, however, today’s release also revised March’s orders higher by 0.6%. This news offset the lower than expected reading in April’s new orders. Accordingly, the data failed to drive bonds prices either direction this morning.

The revised 1st Quarter Productivity and Costs report will be released Wednesday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation and is thought to allow low inflationary economic growth when productivity is high. Last month’s preliminary reading revealed a 1.7% rate, but I don’t think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from its forecasted reading of 1.4%.

The third and final report of the week will be posted Friday morning. April’s Goods and Services Trade Balance data, which will give us the size of the U.S. trade deficit, will be released at 8:30 AM. It isn’t likely to cause much movement in the markets or mortgage rates, but nevertheless forecasts are expecting to see a $63.0 billion deficit.

Overall, there isn’t much data scheduled to drive mortgage rates this week. This makes the stock markets the likely influence on day-to-day trading again. Whether or not this is good news depends on if the stock indexes continue their record setting climb or if a pullback is in the works. The yield on the benchmark 10 year Treasury Note currently stands at 4.94% as some of the major stock indexes set new records last week. The continued upward trend was not expected and drew funds from bonds. A pullback in stocks was expected, which would have likely shifted money back into bonds. If we see the major stock indexes post losses this week, bonds should benefit and mortgage rates should improve.

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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

[bparker]

So you "feel" like mortage interest rates are ready to go back down? Elections are around the corner thus they "usually" go down during election time.

[Adam in CO]

Originally Posted by bparker

So you "feel" like mortage interest rates are ready to go back down? Elections are around the corner thus they "usually" go down during election time.

That's tough. My feelings never apply to my clients dollars and my crystal ball is on the fritz.