Mortgage Commentary

[Adam in CO]

Tuesday?s bond market has opened fairly strong again despite the release of mixed economic data. The stock markets are showing significant losses with the Dow down 130 points and the Nasdaq down 41 points. The bond market is currently up 10/32, which should improve this morning?s rates by another .125 - .250 of a discount point.

The Commerce Department reported this morning that January?s Durable Goods Orders fell 7.8%. This much weaker than forecasts and indicated that the manufacturing sector may be slowing. Even with very volatile aircraft and transportation related orders excluded, new orders fell 3.1%, which was the biggest drop since July 2005. This was great news for bonds and mortgage rates.

February?s Consumer Confidence Index (CCI) was also released this morning, showing an increase to 112.5. It was expected to slip to 109.0 this month, meaning that consumers were more optimistic about their personal financial situations than thought. This is bad news for bonds and mortgage rates and did prevent a larger improvement to this morning?s rates.

January?s Existing Home Sales report was today?s third piece of data. It showed a much stronger level of home resales than was expected. However, since this data isn?t considered to be of high importance, it didn?t affect mortgage rates.

While this morning?s economic data was a factor in early bond trading, other issues also influenced the bond rally. Former Fed Chairman Alan Greenspan was quoted as saying that the U.S. economy may fall into a recession by the end of the year. The attack in Afghanistan that was reportedly targeted for Vice President Cheney and the steep stock losses in China and Europe (that helped fuel U.S. losses) have also added to this morning?s buying in bonds. It is common to see investors sell stock holdings and shift funds to bonds in times of volatility. The end result is usually bonds moving higher and mortgage rates dropping.

Tomorrow morning brings us the release of the 1st Revision to the 4th Quarter GDP and January?s New Home Sales reports. Neither is considered to be of extreme importance to the markets. The GDP reading will likely influence bonds and mortgage rates more than the housing report if it varies from the expected 2.3% revision. Further stock losses may also contribute to bond trading later today and tomorrow.

If I were considering financing/refinancing a home, I would.... Float 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.

[usetosellhummer]

What is the fha rate on refi?

[Adam in CO]

That depends on the scenario, of course. Current government securitized rates (FHA, VA, FNMA, FDMC, GNMA, etc.) are hovering just below 6% today. However, the bond market dropped again, so there's a good chance mortgage rates will follow this week.