Your Daily Mortgage Commentary & Rate Lock Advice for Massachusetts Mortgage Rates
Courtesy of the Massachusetts Mortgage Broker
Thursday’s bond market has opened in negative territory with no important economic being released this morning. The stock markets are showing gains with the Dow up 40 points and the Nasdaq up 2 points. The bond market is currently down 5/32, but we will likely see little change in this morning’s Massachusetts mortgage rates due to strength in bonds late yesterday.
Today’s only relevant data came from the Labor Department, who announced that 457,000 new claims for unemployment benefits were filed last week. This was below forecasts of 464,000, meaning this can be considered negative for bonds. However, this data is not considered to be important to Massachusetts mortgage rates and has had little influence on this morning’s trading.
Both of yesterday’s afternoon events were favorable for bonds and mortgage pricing. The 5-year Treasury Note auction went very well, indicating that investor demand for U.S. securities remains strong. That is good news for mortgage rates because that interest should carryover to mortgage-related securities also. The second of the two relevant sales is taking place today with 7-year Notes being sold. These are a little longer term than yesterday’s securities, which is closer to mortgage bond terms, so another strong sale should lead to improved Massachusetts mortgage rates this afternoon.
The Federal Reserve’s Beige Book report was released yesterday afternoon. It did not give us any negative surprises about economic growth. Most regions had reported modest growth with a couple showing negative activity. The concerns about the economy, such as unemployment and housing, remained considerable in many of the regions. This was all good news for bonds because this information will be relied on heavily when the Fed meets August 10th for their next FOMC meeting.
There are three releases scheduled for release tomorrow morning, including one of the most important reports we regularly see. That one is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. There are two revisions approximately one month apart, but the preliminary posting carries the most importance. Current forecasts are estimating that the economy grew at a 2.5% annual rate during the second quarter. A faster pace will probably hurt bond prices, leading to higher Massachusetts mortgage rates tomorrow. But a smaller than expected reading would likely fuel a bond market rally and lead to lower mortgage pricing.
The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers’ costs for wages and benefits. It is considered to be an important measurement of wage inflation and can impact the bond market and mortgage rates if it varies much from forecasts. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.5%, but the GDP reading likely will have more of an influence on the markets and Massachusetts mortgage rates.
Tomorrow’s third piece of data is the revision to July’s University of Michigan Index of Consumer Sentiment that will help us measure consumer optimism about their own financial situations. As with Tuesday’s CCI release, this data is considered important because rising consumer confidence usually translates into higher levels of spending. This adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate, I think the markets will probably shrug this news off. It is expected to be revised to 67.5.
If I were considering purchasing or refinancing a home and predicting likely Massachusetts mortgage rates, 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 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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