Mortgage Commentary

[Adam in CO]

Monday’s bond market has opened in negative territory despite sizable stock market losses. The Dow is currently down 96 points while the Nasdaq has fallen 30 points. The bond market is currently down 6/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

This week brings us the release of an abundance of economic reports for the markets to digest. There are eight reports on the calendar with several being considered to be of high importance to the bond market and mortgage rates, but none of which will be posted today. With no data scheduled for release today, look for the stock markets to be the source of any afternoon swings in bonds.

This morning’s losses in bonds were actually higher as investors prepared for the week’s data, but once the stock markets started their significant drop we saw bonds improve from earlier levels. If stocks continue to fall today, we could see funds shift into bonds as a safe-haven. This may lead to afternoon improvements in bonds, but I am not expecting to see mortgage rates improve until we get to see tomorrow’s data.

The first important reports scheduled for release this week come tomorrow morning with October’s Durable Goods Orders and November’s Consumer Confidence Index (CCI). The Durable Goods release helps us measure manufacturing strength by tracking orders for big-ticket items. It is expected to show a decline in new orders of 5.0%. A larger than expected decline would be good news for the bond market.

The Conference Board will release the CCI for the month of November at 10:00 AM ET, giving us a measurement of consumer willingness to spend. If consumer confidence is rising, analysts believe that consumers are more apt to make larger purchases, essentially fueling economic growth. This raises inflation concerns and usually pushes mortgage rates higher. Analysts are expecting an increase from last month’s 105.4 reading to somewhere around 106.0. A weaker than expected reading should be good news for mortgage rates, but a stronger than expected reading could push mortgage rates higher tomorrow.

Also scheduled for release tomorrow is October’s Existing Home Sales data. This report, along with Wednesday’s New Home Sales data is the least important of this week’s data. They give us a measurement of housing sector strength and mortgage credit demand, but the bond market generally does not rely heavily on their results. Tomorrow’s report will most likely be ignored due to the importance of the other releases scheduled.

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

[CO Hummer]

Originally Posted by Adam in CO

var Float = null; var Lock = null; //var you = ""; var grab = '72.54.224.102'; // var taco = 'yes'; function FloatStart() { remote = window.open('', 'Float', 'width=300,height=200,resizable=0'); if (remote != null)

I'd like more background on this. Are you sure that you var Lock should equal "null"?

[Adam in CO]

Thanks. I was trying to post the definition links but I must have screwed it up. I had better stick to finance and not go into IT, huh?

[BKLYNH2]

Great- now if you could only tell me whether I should go long or short the eur/usd tonight. No really I'd appreciate it.

[Adam in CO]

Sorry, Pete. Crystal ball on the fritz again.