SmarterBorrowing

Inquire within for current Mortgage Rates or Guidelines   bc@SmarterBorrowing.com  617.771.5021

This week is fairly busy in terms of the number of economic releases and other events scheduled that may influence mortgage rates. There are only four pieces of economic data for us to watch, but three of them are highly important to the markets. In addition to the economic reports, we also have the last FOMC meeting of the year and two important Treasury auctions that are likely to impact bond trading and mortgage pricing. Those events, coupled with the likelihood of further overseas developments from Europe and possibly others, make it highly likely that we will see plenty of movement in the markets and mortgage rates this week.

There is nothing of relevance scheduled for tomorrow. This means we can expect the stock markets to drive bond trading and mortgage rates again. If the major stock indexes open the week with gains tomorrow morning, bonds may move lower, pushing mortgage rates higher. But a weak open in stocks could lead to slightly lower mortgage rates tomorrow. We could also see traders position themselves ahead of the week’s agenda, so even though there is nothing concerning on the calendar, we could see mortgage rates change.

Tuesday has two important events, starting with November’s Retail Sales report. This 8:30 AM ET release will give us a key measurement of consumer spending by tracking sales at retail level establishments. This data is highly important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rapidly rising consumer spending raises the possibility of seeing solid economic growth. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, a large increase in retail sales will likely drive bond prices lower and mortgage rates higher Tuesday. Current forecasts are calling for an increase of 0.6% in November’s sales.

The last FOMC meeting of the year will also be held Tuesday, adjourning at 2:15 PM ET. There is not much debate about what the Fed will do at this meeting with no chance of them raising key short-term interest rates. Therefore, the post meeting statement will likely be the sole source of a market reaction. This statement has the potential to have a significant influence on the markets and mortgage rates as investors look for any indication of what and when the Fed may do next. One potential move would be more debt purchases by the Fed. An announcement of another round of quantitative easing (QE3) could help boost bond prices and improve mortgage rates Tuesday afternoon. Besides that, it is believed that there isn’t much more the Fed can do to help boost economic activity.

There are Treasury auctions scheduled for several days this week, but the two important ones are the 10-year Note sale Tuesday and the 30-year Bond sale Wednesday. Tuesday’s auction is the more important of the two and will likely influence mortgage rates more. Results of each sale will be posted at 1:00 PM ET. If they were met with a strong demand from investors, particularly international buyers, we should see afternoon strength in bonds and improvements to mortgage pricing those days. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates during afternoon hours.

Wednesday has little to be concerned with, except for the 30-year Bond auction. November’s Producer Price Index (PPI) will be posted early Thursday morning. It measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. If Thursday’s release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond well and mortgage rates should fall. Current forecasts are showing a 0.2% increase in the overall index and a 0.1% rise in the core data.

November’s Industrial Production data is also scheduled to be posted Thursday morning, but a little later than the PPI. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting it to show a 0.2% increase in output, indicating modest manufacturing growth. A smaller than expected rise would be good news for bonds, while a stronger reading may result in slightly higher mortgage pricing. However, the PPI release is more important to the markets than this data is.

The week’s most important economic data comes Friday morning when November’s Consumer Price Index (CPI) is posted. It is similar to Thursday’s Producer Price Index, except it tracks inflationary pressures at the more important consumer level of the economy. Current forecasts call for an increase of 0.1% in the overall index and a 0.1% rise in the core data reading. The core data is watched more closely because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates.

Overall, I am expecting to see a much more active week in the financial markets and mortgage pricing than last week. The most important day of the week is either Tuesday or Friday due to the reports being posted those days and the FOMC meeting scheduled. Please maintain contact with your mortgage professional if you have not locked an interest rate yet because we may see sizable changes to mortgage pricing more than one day this week.

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…

LOCK if my closing was taking place between 21 and 60 days…

LOCK 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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@smarterborrowing.com  617.771.5021

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Inquire within for current Mortgage Rates or Guidelines   bc@SmarterBorrowing.com  617.771.5021

Monday’s bond market has opened down sharply due to a very strong opening in stocks. The stock markets are reacting favorably to encouraging news from overseas and strong preliminary sales figures from Black Friday, pushing the Dow higher by 315 points and the Nasdaq up 85 points. The bond market is currently down 22/36 as investors shift funds away from safety and into stocks. This will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

The Commerce Department reported late this morning that sales of newly constructed homes rose 1.3% last month. That was slightly stronger than thought, but not enough to have an impact on today’s markets or mortgage rates, especially with the stock rally already in full force. The data hints at a strengthening housing sector, however, this report does not carry the significance that some of the week’s other releases do.

Watch the major stock indexes for mortgage rates direction today. If they give back a good portion of this morning’s gains, we could see bond prices improve from current levels and mortgage rates revise slightly lower. The rest of the week brings us five more pieces of economic news that may affect mortgage rates, some of which is considered highly important to the financial and mortgage markets. This means we have other forces to drive bond trading and mortgage pricing other than stock strength or weakness. As the week progresses, the data gets more important, so it is quite possible that the most movement in rates has yet to come.

November’s Consumer Confidence Index (CCI) will be released late tomorrow morning by the Conference Board. It gives 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 makes long-term securities such as mortgage-related bonds less attractive to investors and usually leads to higher mortgage rates. Analysts are expecting to see a sizable increase in confidence from last month’s level, meaning consumers were more optimistic about their own financial situations this month than they were last month. A weaker reading than the 44.0 that is expected would be good news for mortgage rates, while a stronger reading could push mortgage rates higher tomorrow.

Overall, the most important day of the week is Friday with monthly employment figures being released, but we may also see sizable movement in rates Thursday. Friday’s employment data could cause a significant change in rates, but Thursday’s ISM index is also one of the more important reports we see each month. If Friday’s data reveals stronger than expected results, we may see rates spike higher after its release, possibly erasing any gains from the week. It will probably be the key to rates moving lower or higher for the week. I suspect it will be a fairly active week for the markets and mortgage pricing, especially the latter part, so 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…

LOCK if my closing was taking place between 21 and 60 days…

LOCK 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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@smarterborrowing.com  617.771.5021

More Sharing Options

Inquire within for current Mortgage Rates or Guidelines   bc@SmarterBorrowing.com  617.771.5021

This week brings us the release of six monthly economic reports for the markets to digest. With very important data scheduled for release two different days and relevant data four of the five days, we will likely see a fair amount of volatility in the markets and mortgage pricing this week.

There is nothing scheduled for release tomorrow, leaving the bond market to movement in stocks and overseas news. As of this evening, it appears that bonds are going to react negatively to news from Europe, meaning stocks may start the week off in positive ground. That can change between now and the opening bell tomorrow morning, but as of now it appears we may see some pressure in bonds and a possible increase to mortgage rates tomorrow.

The first data is one of the most important reports of the week. The Commerce Department will give us October’s Retail Sales figures early Tuesday morning. This data measures consumer spending, which is considered extremely important to the markets because it makes up two-thirds of the U.S. economy. It is expected to show a 0.4% rise in spending, meaning consumers spent much less last month than they did in September. A larger increase would be considered negative news for bonds because large increases in spending fuels an economic recovery and raises inflation concerns in the marketplace. If Tuesday’s report reveals a smaller than expected increase in spending, bonds should react favorably, pushing mortgage rates lower. If it shows a larger than expected increase, mortgage rates will likely move higher.

Also Tuesday is the release of October’s Producer Price Index (PPI) from the Labor Department, which is one of the two key inflation readings on tap this week. The PPI measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. If it reveals stronger than expected readings, indicating that inflationary pressures are rising at the manufacturing level, the bond market will probably react negatively and cause mortgage rates to move higher. Analysts are expecting to see a 0.2% decline in the overall reading and a 0.1% increase in the core data.

Wednesday also has two reports scheduled that will likely influence mortgage rates. The first is October’s Consumer Price Index (CPI) at 8:30 AM ET. This index is similar to Tuesday’s PPI, except it measures inflationary pressures at the more important consumer level of the economy. We consider this report as one of the most important reports we get each month. The overall reading is expected to show no change from September’s level while the core data is expected to rise 0.1%. Weaker than expected readings would be good news for bonds and mortgage rates, while larger than forecasted increases could lead to higher mortgage rates Wednesday.

October’s Industrial Production data will be posted mid-morning Wednesday. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to reveal a 0.4% increase in production, indicating moderate strength in the manufacturing sector. Stronger levels of production would be considered bad news for the bond market and mortgage rates, but this data is not as important as the CPI readings are. A significant surprise in the CPI would likely make this data a non-factor in Wednesday’s mortgage pricing.

Thursday’s only monthly data is October’s Housing Starts. This data gives us an indication of housing sector strength, but usually does not have a noticeable impact on mortgage rates. I don’t expect this month’s version to be any different unless it varies greatly from analysts’ forecasts. It is expected to show a sizable decline in starts of new homes.

The final report of the week will come from the Conference Board late Friday morning when they release their Leading Economic Indicators (LEI) for October. This is a moderately important report that attempts to predict economic activity over the next three to six months. It is expected to show a 0.6% increase, meaning economic activity will rise fairly rapidly over the next couple of months. Generally speaking, this would be bad news for bonds. However, since this data is considered only moderately important, its results need to vary by a wide margin from forecasts for it to affect mortgage rates.

Overall, look for Tuesday or Wednesday to be the most important with very important reports scheduled those days. It is difficult to label any particular day as the quietest day, but Thursday is a good candidate. The key releases will be Tuesday’s Retail Sales and Wednesday’s CPI reports. They will probably determine whether rates close the week higher or lower than tomorrow’s opening levels. Since this is likely to be a fairly active week for mortgage rates, it would be prudent to maintain regular 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…

LOCK 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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@smarterborrowing.com  617.771.5021

More Sharing Options

Inquire within for current Mortgage Rates or Guidelines   bc@SmarterBorrowing.com  617.771.5021

This week brings us the release of seven economic reports and two relevant Treasury auctions for the bond market to digest. There is nothing of importance scheduled for release tomorrow, but we do have something to watch every other day. The data ranges from low importance to extremely important so some reports will have a much bigger impact on trading than others. We also need to keep an eye on the stock markets as they have been heavily influential on bond market direction recently. In other words, there is a pretty good chance of seeing noticeable movement in mortgage rates several days this week, especially if the major stock indexes rally or post sizable losses.

October’s Consumer Confidence Index (CCI) is the first release of the week and Tuesday’s only news. This Conference Board index will be released at 10:00 AM ET. It gives us a measurement of consumer willingness to spend and is expected to show a small increase in confidence from last month’s 45.4 reading. That would mean that consumers felt a little better about their own financial situations than last month, indicating they are slightly more likely to make large purchases in the near future. As long as the reading doesn’t exceed the forecasted 46.0, we will likely see the bond market react favorably to this report. This data is watched closely because consumer spending makes up two-thirds of the U.S. economy.

Early Wednesday morning, the Commerce Department will post Durable Goods Orders for September. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Analysts are currently calling for a decline in new orders of approximately 1.0%. If we see an unexpected increase in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast. Therefore, a small variance from forecasts likely will have little impact on bond trading or mortgage pricing.

Also Wednesday is the release of September’s New Home Sales at 10:00 AM ET. This data covers the remaining 15% of home sales that last week’s Existing Home Sales report didn’t include and is this week’s least important data. It is expected to show an increase in sales of newly constructed homes, but regardless of its results I am not expecting it to have a significant impact on mortgage rates Wednesday.

Thursday’s only monthly or quarterly data is not only the most important report of the week, but also the most important we see regularly. The preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) will be released early Thursday morning. The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. and therefore is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Thursday’s release is the first and usually has the biggest impact on the markets. Current forecasts call for an increase of approximately 2.2% in the GDP, which would mean that the economy grew at a noticeably quicker pace than the 2nd quarter’s 1.3%. If this report does show a much smaller increase, I am expecting to see the bond market rally and mortgage rates fall. However, a larger than expected rise could lead to a rally in stocks, bond selling and a sizable increase in mortgage pricing Thursday.

There are three reports scheduled for release Friday that may affect mortgage rates. The first comes at 8:30 AM ET when September’s Personal Income and Outlays report will be posted. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see a 0.3% increase in income and a 0.6% rise in spending. Smaller than expected increases in both readings would be good news for the bond market and mortgage pricing.

The second report of the day is the 3rd Quarter Employment Cost Index (ECI), also at 8:30 AM ET. This data tracks employer costs for salaries and benefits, giving us an indication of wage inflation pressures. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.6%. A smaller than expected increase would be good news for mortgage rates.

The week’s last report comes just before 10:00 AM ET Friday when the University of Michigan updates their Index of Consumer Sentiment for this month. Current forecasts show this index remaining nearly unchanged from the preliminary reading of 57.5. This report is moderately important because it helps us measure consumer confidence, which is believed to indicate consumers’ willingness to spend. As with Tuesday’s CCI release, the lower the reading, the better the news for mortgage shoppers.

This week also has Treasury auctions scheduled each day except Friday. The only two that are likely to influence mortgage rates are Wednesday’s 5-year and Thursday’s 7-year Note sales. If those sales are met with a strong demand, particularly Thursday’s auction, bond prices may rise during afternoon trading. This could lead to improvements to mortgage rates shortly after the results of the sales are posted at 1:00 PM ET each day. But a lackluster investor interest may create selling in the broader bond market and lead to upward revisions to mortgage rates.

Overall, it will likely be an active week for the markets and mortgage rates. I believe that the single most important day will probably end up being Thursday with the extremely important GDP release in the morning and the 7-year Treasury Note auction in the afternoon, but Friday has three reports scheduled so it is expected to be active also. Tomorrow is likely to be the least important day, but we still could see some movement in rates as the markets prepare for the upcoming week. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week, especially 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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@smarterborrowing.com  617.771.5021

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Inquire within for current Mortgage Rates or Guidelines   bc@SmarterBorrowing.com  617.771.5021

This week brings us the release of only three monthly economic reports that are likely to influence mortgage rates. However, two of those three releases are extremely important to the financial and mortgage markets and we also have a congressional appearance by Fed Chairman Bernanke. We start the week with one of the highly important reports and end it with the other. In between, we will watch Chairman Bernanke’s testimony and stock movement for mortgage rates direction.

Tomorrow has the Institute for Supply Management (ISM) posting their manufacturing index for September at 10:00 AM ET. This index measures manufacturer sentiment and it can be heavily influential on the markets and mortgage rates. Analysts are expecting to see little change from August’s 50.6 reading, meaning surveyed manufacturers felt business conditions were steady from the previous month. The 50.0 benchmark is extremely important because a reading above that level means more surveyed executives felt business improved than those who said it had worsened. This data is important not only because it measures manufacturer sentiment, but it is also very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If it reveals a reading below 50.5, meaning sentiment fell short of expectations, we should see the bond market move higher and mortgage rates fall tomorrow.

Tuesday’s data will come from the Commerce Department, who will post August’s Factory Orders data at 10:00 AM ET. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but also includes orders for non-durable goods. It can impact the bond market enough to change mortgage rates if it varies from forecasts by a wide margin. Analysts are forecasting a decline of 0.1% in new orders, meaning manufacturing activity slowed in August. This would be good news for the bond market and mortgage pricing, but I believe we will need to see a much larger decline than 0.1% for this data to create an improvement in rates.

Chairman Bernanke’s testimony will take place late Tuesday morning. He will speak before a joint congressional committee about the economy and monetary policy. As is the case whenever he speaks publicly, all eyes will be on his words. I am sure he will be drilled from members of the committee about the Fed’s intentions on getting the economy moving. It will be interesting to see what type of questions get thrown at him. Market participants will be looking for any indication of what their next move will be. There is a high likelihood of seeing a good deal of volatility during his testimony and the Q&A portion that will follow.

Wednesday and Thursday have nothing of concern scheduled. There are a couple of private sector reports due to be posted, but none of them have the potential to cause significant movement in mortgage rates. We will get last week’s unemployment numbers from the Labor Department Thursday morning, but since it tracks only a single week’s worth of new claims, its impact on the markets and mortgage rates is usually minimal. Worth noting though is the fact that this Thursday’s report will cover the last week of the month that Friday’s monthly report will include. Therefore, a significant surprise in Thursday’s numbers could cause some analysts to revise their estimates for Friday’s report and may influence mortgage rates slightly.

The Labor Department will post September’s Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added or lost during the month and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings.

If this report gives us weaker than expected readings, bond prices should move higher and we should see lower mortgage rates Friday. However, stronger than forecasted readings could cause a sizable spike in mortgage pricing. Analysts are expecting to see the unemployment rate remain at 9.1%, an increase of 63,000 new jobs from August’s level and a 0.2% increase in earnings.

Overall, I suspect we will see a fair amount of volatility in the markets and mortgage rates this week. There isn’t that much data being released, but what is being posted is extremely important to the markets and highly influential on mortgage pricing. Labeling Tuesday and Friday as the most important days is easy due to Mr. Bernanke’s speech and the importance of the Employment report. Tomorrow will also probably be an active day for mortgage rates, so maintain fairly constant contact with your mortgage professional this week 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…

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.

• Are you a possible Massachusetts First Time Homebuyer?
• Do you have a Real Estate client inquiring about current Mortgage Rates?
• Do you have any Refinancing questions?
• Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
• Have your Real Estate clients been Pre Approved?

bc@smarterborrowing.com  617.771.5021

More Sharing Options