Your Daily Mortgage Commentary & Rate Lock Advice for Massachusetts Mortgage Rates
Courtesy of the Massachusetts Mortgage Broker
WEDNESDAY AFTERNOON UPDATE:
The bond market has reacted favorably to Fed Chairman Bernanke’s testimony to the Senate Banking Committee. Mr. Bernanke didn’t say anything that was a major surprise, but did hit some key points that are favorable to bonds and Massachusetts mortgage rates. He said that he expects key short-term rates to remain low for an “extended period,” that the economic recovery will be slower than previously estimated and that the Fed could take further stimulus action of needed. He added that inflation remains lower than earlier forecasts.
All of those points are favorable to long-term securities such as mortgage-related bonds and in turn Massachusetts mortgage rates. This is particularly true of the inflation comments because inflation erodes the value of a bond’s future fixed interest payments, making them less attractive to investors.
The stock markets have moved lower with the Dow down 134 points and the Nasdaq down 32 points. The bond market has improved from earlier levels, currently up 14/32. That is enough of a move to improve Massachusetts mortgage rates this afternoon by approximately .125 of a discount point. However, many lenders may opt to reflect this improvement in tomorrow’s rates rather than revising today’s pricing.
Mr. Bernanke will repeat his testimony tomorrow in front of the House Financial Services committee. He is not likely to say anything that would contradict or differ much from today’s prepared statement. The question and answer portion of the proceeding could bring something of a surprise, but it is not of much concern to me.
The Labor Department will give us last week’s unemployment figures early tomorrow morning. They are expected to say that 445,000 new claims for unemployment benefits were filed last week, which would be an increase from the previous week. The higher the number of claims, the better the news for bonds. But since this data tracks only a single week’s worth of claims, it usually has a minimal impact on Massachusetts mortgage rates.
The National Association of Realtors will post June’s Existing Home Sales figures late tomorrow morning. This report gives us a measurement of housing sector strength and mortgage credit demand, but as with all of this week’s data it is not considered highly important. Current forecasts are calling for a decline in sales from May’s totals. A larger than expected drop in sales would be considered good news for bonds and Massachusetts mortgage rates because a weak housing sector will make it difficult for the economy to recover anytime soon. However, unless this data varies greatly from forecasts it probably will not cause much of a change in mortgage rates.
June’s Leading Economic Indicators (LEI) at 10:00 AM will also be posted late tomorrow. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market and Massachusetts mortgage rates. It is expected to show a 0.4% decrease, meaning that we may see noticeable pullback in economic activity over the next few months. A larger decline in the index would be good news for the bond and mortgage markets.
If I were considering purchasing or refinancing a home and predicting likely Massachusetts mortgage rates, 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 a general opinion of what I would do if I were considering whether to lock or float a Massachusetts mortgage based on the current mortgage market. Your individual situation may be different. Contact me if you would like advice for your particular circumstances.
Copyright : Mortgage Commentary
Geof McLaughlin, better known as The Massachusetts Mortgage Broker, is a nationally acclaimed mortgage professional committed to educating and empowering consumers about all things mortgage through his popular Massachusetts Mortgage Broker blog.
Geof is a top loan originator for one of the country’s leading mortgage companies, Mortgage Master Inc, with a proven reputation of offering its clients the best Massachusetts mortgage rates and lowest closing costs. He can be reached directly at 508.656.0055 or at geof@MAMortgageBroker.com.
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