B & J Appraisals,Inc.Company Blog

Rate Lock Advisory
February 21st, 2012 1:33 PM
Tuesday’s bond market has opened in negative territory due to news from Greece that they have received approval for their much needed bailout. The stock markets are reacting favorably to the news as it eases concerns that a potential default or bankruptcy by Greece would have a fairly significant impact on the global economy. The Dow is currently up 37 points while the Nasdaq has gained 9 points. The bond market is currently down 12/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point from Friday’s morning pricing.

This week doesn’t have many economic reports scheduled with only three pieces of monthly economic data due to be posted, none of which come today. There are also two Treasury auctions that have the potential to cause movement in mortgage pricing. None of the reports or auctions are considered to be highly important, so the stock markets will also be a heavy influence on bond trading and mortgage rates.

The National Association of Realtors will post January's Existing Home Sales report late tomorrow morning. It tracks home resales throughout the country, giving us a measurement of housing sector strength. It is expected to show a small increase in sales of existing homes, meaning the housing sector remained strengthened during the month. Ideally, the bond market would like to see a sizable decline in sales because weak housing is one of the hurdles that the economy must overcome to recover from the recession. The longer it takes for the housing market to recover, the longer it will take the economy to do the same.

The first of the two auctions will also take place tomorrow when the Treasury sells 5-year Notes. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates.

Overall, this week is lighter than last week in terms of economic releases. Therefore, it would not be surprising to see a fairly calm week in mortgage rates, or at least less movement than last week. However, more news from overseas and stock movement could also heavily influence trading and mortgage rates. I think we will see the most movement either tomorrow or Friday, buy any day could turn active if stocks rally or sink. Despite the relatively light calendar this week, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.

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... 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.

Posted in:General
Posted by JOHN TOMBINI on February 21st, 2012 1:33 PMPost a Comment

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