Market Snapshot

Friday's bond market opened in the positive territory following this morning's release of December's employment data. Surveys had initially estimated a net gain in jobs, but then yesterday that estimate was revised to a loss of 35K jobs. Today's report reflected a loss of 85K jobs. Stocks reacted less than favorably but closed slightly up.  Bonds took their lead from stocks and are currently -3. Rates were initially posted flat from Thursday's close, but when the Fannie Mae bond reached +15 around 3:00 PM, we improved rates and origination fees fell by .125%.

Buy, Lock or Float?

Take a look at the Fannie Mae Bond Chart below. Remember, when Fannie Mae (FNMA) bond prices go down, rates go up. A shift of 12 basis points (12/100 of a point) will cause discount points to go up .125%.  You'll see very clearly that a definitive trend range has been established. Even in the face of higher than anticipated job losses today, normally a stimulant to drive the bond higher, the bond ran up against the downward trend line and then retreated.

I cannot overemphasize the point: Housing prices are at a discount, the Federal Reserve is subsidizing interest rates and giving a tax credit to boot and mortgage interest rates are headed up. If you or anyone you know is in the market for a home or refinance and is in the financial position to act, NOW is the time.

Market News

Today's big news came from the Labor Department, who reported that the U.S. unemployment rate held at 10.0% and that 85,000 jobs were lost last month. The unemployment was expected to be unchanged, but the lost payrolls were worse than many had thought. The report also revealed a relative minor upward change in November's payrolls, revising from a loss of 11,000 to a gain of 4,000 jobs. But even with that revision, December's loss indicates that the employment sector was weaker than many had thought.

The third important reading of the report- average hourly earnings, matched forecasts with a 0.2% increase. Overall, this report can be considered favorable for the bond market, especially since recent Fed comments have hinted at concern about the labor market. It is one of the factors why the Fed has been so hesitant to even consider raising short-term interest rates at recent meetings. This should bode well for bonds and lead to improvements in mortgage rates in the immediate future, unless we get contradictory economic data.

Next week is fairly active in terms of relevant economic reports and events, but the most important data comes the latter part of the week. There is nothing relevant scheduled to be posted Monday, so look for the stock markets and any weekend news to be the biggest influence on changes to mortgage rates. We will get important readings on consumer spending and inflation at the consumer level of the economy late in the week in addition to a couple of important Treasury auctions. Look for more details on next week's events in Sunday's weekly preview.

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.

Market Snapshot

Thursday's bond market opened in negative territory as yesterday's afternoon weakness continued into this morning's trading. Despite a lousy day for stocks - the Dow is currently down 122 points and the Nasdaq down 44 points - the Fannie Mae 30-year bond has been down as much as 12 basis points. In the last 30 minutes mortgage bonds have improved to flat on the day. The 200 day moving average has provided support, but in light of the Fed's reiteration yesterday that they indeed intend to put a stop to their mortgage-backed securities purchasing program in March, mortgage bonds have failed to gain momentum. Mortgage rates came out this morning at 11:00 AM .25% to .375% higher in points, but around 2:00 PM, as the bond market recovered, we posted a .125% improvement.

Lock or Float

My bias is toward locking, but it may be advisable for the remainder of the day to see if the 200 day moving average springboards bonds higher with help from slumping stocks - then lock at day's end. Bonds are in a "overbought" position and this is a great time to lock and take advantage of recent gains.

Market Snapshot

Friday's bond market has opened down slightly despite another round of stock selling. The stock markets are showing losses again, but they are well above earlier lows. The Dow is currently down 46 points after losing as much as 92 points earlier this morning. The Nasdaq's rebound has been much less noticeable with it currently down 17 points and only 9 points off its earlier low. The bond market is currently down 9 basis points, but due to yesterday's gain of 25 basis points, rates came out this morning .125% lower (to discount points) than Thursday's close on 30 and 15 year fixed. 5/1 adjustable rates were substantially better.

Lock or Float

As I've said numerous times on the past several weeks as bonds have been pressured higher, mostly by the inevitability of inflation and the Fed's curtailing of its mortgage backed securities purchase program, the trend for mortgage interest rates is HIGHER. With that said there are the normal ebbs and flows of stocks and bonds and currently the Fannie Mae (FNMA) bond is enjoying a run higher. Remember, higher bond prices equate to lower rates. But take a look at the bond chart. You'll see that bond prices have stepped higher, but have run into a dual level of resistance at the 100 and 50 day moving averages. That's of particular interest because stocks have slumped for three consecutive days on the news of the Obama Big Bank tax proposal. In general stocks and bonds compete for investment capital so when stocks go down investors move the money from the sale of stocks to bonds, in safekeeping if you will. 

So my advice is to lock because of the overarching trend in bond prices, but very cautiously float in the immediate term (today) to see if the bond can break through the 50 & 100 day moving averages. If they do we will likely change our bias to floating.

Market News:

Market Snapshot

Tuesday's bond market has opened in negative territory as stocks recover a good part of Friday's losses. The stock markets are off to a strong start following yesterday's holiday with the Dow up 96 points and the Nasdaq up 27 points. The bond market is down 6 basis points, which has pushed this morning's mortgage rates higher by approximately .125 of a discount point over Friday's morning rates.

Lock or Float

My bias is toward locking with one eye on the 200 day moving average and another on today's Massachusetts Senatorial election.  The FNMA bond closed Friday just above the 200 day moving average - a significant benchmark. But for that average to become a significant level of support the bond needs to close above that mark again. The bond is currently 4 points above the 200 day moving average but has dipped below it for most of the morning.  If Scott Brown upsets Martha Coakley in today's Special Senatorial election in Massachusetts, it will likely send signals to Wall St that health care reform will be trapped in gridlock, and stocks may react positively - having a negative impact on bonds.  Undoubtedly, the trend for mortgage rates is "up" and it may be wise to take advantage of the dip we've seen in the last week and lock here. 

Market News

This week brings us the release of three pieces of economic data to digest, but only one is considered to be of high importance. The first two reports will be released early tomorrow morning. The Labor Department will post their Producer Price Index (PPI) and the Commerce Department will release December's Housing Starts data, both at 8:30 AM. The PPI is much more important to the markets and mortgage rates because it measures inflationary pressures at the producer level of the economy. It is the sister report to last week's Consumer Price Index (CPI) that didn't give us any major surprises. Analysts are expecting to see no change in the overall reading and a 0.1% increase in the more important core data reading that excludes volatile food and energy prices. Unexpected increases, particularly in the core reading, could mean higher mortgage rates tomorrow.

December's Housing Starts helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don't see it causing much movement in mortgage rates tomorrow. It is expected to show little change from November's starts.

Overall, tomorrow will likely turnout to be the most important day of the week with the PPI scheduled. If it meets expectations or is lower than forecasts, we could see mortgage rates close the week lower than this morning's opening levels. There will be discussion about Congress raising the debt ceiling this week that may bring the amount of outstanding U.S. debt in focus again. Unfortunately, if it becomes a hot topic, the bond market may see pressure as everyone is reminded about the large sum of debt we currently have outstanding. But, I don't think we have too much to be concerned with in this week's economic data and could see the rates move little this week.

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.

Market Snapshot

On my Twitter page I am currently advising float, but only in the IMMEDIATE term...that means today. This drop will likely be short-lived so I recommend poising yourself to take advantage. Apply online if you have not because only pre-approved loans can be locked.

Market News

November's Goods and Services Trade Balance report was posted this morning, showing a larger than expected $36.4 billion trade deficit. Analysts were expecting to see a $34.5 billion deficit, but this data is the week's least important and does not carry the influence to heavily affect mortgage pricing. Therefore, its impact on today's rates has been minimal.

There is no relevant data scheduled for release tomorrow morning. However, the Federal Reserve will post its Fed Beige Book report at 2:00 PM ET tomorrow. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises.

The first of this week's two important Treasury auctions is tomorrow also. The Treasury will sell 10-year Notes and will post results at 1:00 PM ET. If there is a strong demand for the Notes, we should see the bond market move higher during afternoon trading. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates.

This week also kicks off the quarterly earnings season. Alcoa, who is usually the first Dow component company to report each quarter, gave investors disappointing results after the close yesterday. This has led to concern about results from other big-name companies in the coming weeks. That has some investors shifting funds from stocks (expecting stock prices to fall further as more disappointing results are announced) into bonds as a safe-haven. This is good news for the bond market, at least temporarily and could lead to further improvements in mortgage rates if the pattern continues.

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.

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.