Monday’s bond market has opened in negative territory following a strong opening in stocks. The stock markets are kicking the week off with a rally that has pushed the Dow higher by 198 points and the Nasdaq higher by 48 points. The bond market is currently down 20/32, which will likely push this morning’s mortgage rates higher by approximately .250 – .375 of a discount point over Friday’s morning pricing.
Today’s only economic data came late this morning from the National Association of Realtors. They announced that home resales fell 9.6% last month, falling well short of expectations. They also reported that the median sale price fell to its lowest level since April 2002 and that 39% of all sales were near or at foreclosure proceedings. This means that the housing sector was much weaker than many had thought and certainly not near the level that is needed to help the economy grow. That bodes well for the bond market and mortgage rates, but unfortunately for mortgage shoppers, today’s housing news is not enough to offset the sizable stock rally we are seeing.
The rest of the week brings us another four monthly and quarterly reports that have the potential to influence mortgage rates. There is nothing of importance scheduled for tomorrow, so look for the stock markets to be the biggest factor behind changes to mortgage rates. Another round of stock gains would likely mean higher mortgage rates tomorrow.
Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be the Thursday’s Durable Goods Orders, but none of the week’s data has the potential to be a major market mover. If the stock markets move lower, we should see gains in bonds and improvements in mortgage rates. But, if stocks move higher, pressure in bonds is possible, leading to higher mortgage pricing. I believe there is plenty of the recent flight-to-safety funds still in bonds that will probably move out if the stock markets continue to regain last week’s losses. This could lead to increases in mortgage rates if investors shift funds away from bonds and back into the stock markets. Therefore, I still recommend proceeding with caution if you are floating an interest rate.
If I were considering financing/refinancing a home, I would….
Lock if my closing were taking place within 7 days…
Lock if my closing were taking place between 8 and 20 days…
Lock if my closing were taking place between 21 and 60 days…
Lock if my closing were taking place over 60 days from now…
This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.