Mortgage rates have improved over the past several days, but the trend is that rates are going up...for several reasons, not the least of which is that the Federal Reserve is ending it's mortgage bond purchase program early in 2010. So you know that rates go up and down on a daily basis, and rates are going down now. But we will not hit the lows of earlier this year or even two weeks ago. So it is important to understand that if you are watching rates and waiting to refinance thinking that you missed the boat, but waiting for rates to return to the previous lows...the reality of the bond market does not align with that line of reasoning. My sincere advice is to take advantage of days like today when rates hit a low point. Otherwise there is a very good likelihood that you may miss the opportunity to refinance.
Wednesday's bond market has opened in positive territory again after this morning's only economic report showed no surprises. A negative open for stocks is also helping bonds during early trading. The Dow and Nasdaq are both showing losses of 28 points. The bond market is currently up 10/32, which should improve this morning's mortgage rates by approximately .250 - of a discount point. The Commerce Department released September's Durable Goods Orders this morning, announcing an increase of 1.0% in new orders for big-ticket items. This matched forecasts and had little impact on this morning's trading or mortgage pricing.September's New Home Sales report was also posted this morning, but its results did surprise many analysts. It was expected to show that sales of newly constructed homes rose last month, but actually revealed a decline in sales. It also revised August's final sales figures lower, meaning that sales were weaker than thought over the past two months. This can be considered favorable news for the bond market and mortgage rates, but this data usually does not heavily influence trading or rates.The 5-year Notes auction is being held today while tomorrow brings us the 7-year Note sales. If the sales go well, we may see afternoon strength in bonds that lead to downward revisions to mortgage rates. But lackluster interest in them will probably cause bonds to fall and mortgage rates to move higher. Results of the sales will be posted at 1:00 PM ET today and tomorrow.The most important release of the week will be released early tomorrow morning. This is the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) and is arguable the single most important report the bond market sees regularly. The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. and therefore is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Tomorrow's release is the first and usually has the biggest impact on the markets. Current forecasts call for an increase of approximately 3.2% in the GDP. If this report does show a much smaller increase, I am expecting to see the bond market rally and mortgage rates to fall. However, a larger than expected rise could lead to bond selling and a sizable increase in mortgage pricing tomorrow.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.
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