Your Daily Mortgage Commentary & Rate Lock Advice for Massachusetts Mortgage Rates
Courtesy of the Massachusetts Mortgage Broker
WEDNESDAY AFTERNOON UPDATE:
As expected, this week’s FOMC meeting has adjourned with no change to key short-term interest rates. The post-meeting statement didn’t bring any changes to the key verbiage that some had hoped to see. The Fed did say that the economy is improving, but did not change words from the previous statements that would have indicated they were expecting to start raising rates sooner than later. While not many people expected them to adjust rates at this meeting, some analysts are growing impatient and fear that waiting too long to start raising rates will cause more problems, particularly inflationary as the economy gains steam. This issue is widely debated but was the focal point of this meeting, so some market participants and economists are disappointed by its results.
Also today was the 5-year Note auction, whose results were posted at 1:00 PM ET. The sale went fairly well by several key benchmarks or measurements. This is encouraging for the broader bond market as it indicates there is a good appetite for U.S. securities. Tomorrow’s sale is a little more relevant to Massachusetts mortgage rates because 7-year Notes will be sold. Since these are a little longer-term than today’s sale, they are a bit closer to the term of mortgage-related securities and will help us measure investor interest in mortgage bonds. The stronger the demand, the better off mortgage shoppers are since it should lead to lower mortgage rates in the near future.
Overall, this afternoon’s events are fairly neutral for the bond market and Massachusetts mortgage rates. At least they should be. The stock markets took the events in stride with the Dow and Nasdaq both near their 2:00 PM levels. But the bond market has reacted negatively this afternoon, extending earlier losses. It is currently down 18/32, which will likely lead to upward revisions to mortgage rates of approximately .125 – .250 of a discount point from this morning’s rates. Some lenders may opt to wait until tomorrow’s pricing to reflect this change, but with no important economic data scheduled tomorrow I would not be surprised to see many lenders make the change to Massachusetts mortgage rates this afternoon.
The only data worth mentioning for tomorrow are weekly unemployment figures from the Labor Department. They are expected to report that new claims for unemployment benefits fell to 445,000 last week. The larger the number, the better the news for the bond market and mortgage pricing, however, this data usually does not influence Massachusetts mortgage rates unless it shows a significant variance between forecasts and the actual number of new claims filed.
Friday’s data is a different story though with three relevant reports scheduled for release. We will get the 1st Quarter’s Gross Domestic Product (GDP) reading and Employment Cost Index (ECI) along with this month’s revised consumer sentiment index from the University of Michigan. The GDP can be a major market mover and the ECI helps us measure wage-inflation so if it shows a sizable surprise it could also fuel a noticeable change to Massachusetts mortgage rates. Friday will likely end up being the most important day of the week as it will probably give back this week’s improvement to mortgage rates or could lead to another downward revision. Therefore, I recommend proceeding with caution if still floating an interest rate.
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…
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 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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