Mortgage Blog

Wednesday's bond market opened fairly flat after this morning's economic news failed to show any major surprises. The stock markets are showing small gains with the Dow up 26 points and the Nasdaq up 10 points. The bond market is currently nearly unchanged form yesterday's close, but we will likely see an improvement of approximately .125 of a discount point in this morning's mortgage rates as a result of strength in bonds late yesterday.

The Labor Department said this morning that July's Consumer Price Index (CPI) rose 0.1% while the core data rose 0.2%. Both of those readings matched forecasts, therefore, the market had little reaction to the news.

Also released this morning was July's Industrial Production data. It showed that output at U.S. factories, mines and utilities rose 0.3% last month. This also matched forecasts and has had little influence on bond trading or mortgage rates.

Tomorrow's only monthly data is July's Housing Starts data. This report gives us an indication of housing sector strength and mortgage credit demand. However, it isn't considered to be of high importance to the bond market or mortgage pricing and usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts.

Also tomorrow, the Labor Department will post weekly unemployment claims. They are expected to show 315,000 new claims, but unless there is a significant variance from that level.

I am shifting back to the lock recommendation for immediate and short-term periods because it appears that the bond rally is losing steam. With a lack of significant data scheduled for release over the next few days that could drive rates lower, we likely will not see much of an improvement in rates. Accordingly, I am shifting back to locking since we have captured yesterday's gains.

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.

randy.reed@mpspecialists.com