Market Snapshot
Monday's bond market opened in positive territory despite early stock gains and stronger than expected economic data. The stock markets are starting the new decade with a sizable rally. The Dow is currently up 156 points while the Nasdaq has gained 39 points. The bond market is currently up 25 basis points. Interest rates are mostly unchanged from Thursday's close.
Lock or Float?
Mortgage bonds are currently trading within a very definitive downward trend range. Remember, when bond prices go down, mortgage interest rates go up. We've discussed the reason in recent updates, but the Fed's curtailing their mortgage security purchase program bears most of the blame for the downturn. As bonds trade within the downward trading range there will be good and bad days. Today is a good day. But rates will very likely not return to late November levels. So if you float, watch carefully and definitely follow me on Twitter for announcements when rates are about to go up or down.
Market News
The Institute for Supply Management (ISM) gave us today's important data when they posted their manufacturing index for December late this morning. They reported a reading of 55.9, meaning that manufacturer sentiment about business conditions was stronger than thought. This normally is bad news for bonds and mortgage rates since it points towards a strengthening manufacturing sector. However, fortunately for mortgage borrower it appears that the data is being ignored this morning.The fact that we are seeing a positive open for bonds on a day with sizable stock gains and stronger than expected results from an important economic release could indicate that the bond selling over the last two weeks was indeed overkill. Since we are seeing positive movement on what should be a negative day for bonds, I am optimistic that we could see further improvements to mortgage rates in the immediate future. The Commerce Department will post November's Factory Orders data late tomorrow morning. This data gives us a fairly important measurement of manufacturing sector strength. It is similar to the Durable Goods Orders release that was posted late last week, except this report includes orders for both durable and non-durable goods. Durable goods are items that are expected to last three or more years such as electronics and autos. Examples of non-durable goods are food and clothing. Analysts are expecting to see an increase of 0.5% in new orders. This report generally does not have a huge impact on the bond market or mortgage rates, but it can influence bond trading enough to create a minor change in rates. The smaller the increase, the better the news for mortgage rates.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... 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.
Copyright © 2012 Carolina's Lending Source, Inc.Portions Copyright © 2012 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site Map
