Your Daily Mortgage Commentary & Rate Lock Advice for Massachusetts Mortgage Rates
Courtesy of the Massachusetts Mortgage Broker
Wednesday’s bond market has opened in positive territory despite the release of generally unfavorable economic data. The stock markets are helping somewhat with the Dow down 40 points and the Nasdaq down 10 points. The bond market is currently up 9/32, but we should still see a small increase in this morning’s Massachusetts mortgage rates due to weakness in bonds late yesterday. Yesterday’s stock rally helped push bond prices lower during afternoon trading yesterday.
This morning brought us the release of three relevant economic reports. The results were mixed amongst them, but the more important ones showed stronger than expected results. The first was the least important and gave us favorable news. This was May’s Housing starts that revealed a 10% decline in starts of new homes last month. That was a much larger drop than expected and the pushed starts to their lowest level in five months, indicating that the housing sector may be weakening once the tax credits expire. This is basically good news for Massachusetts mortgage rates because a weak housing sector makes a broader economic recovery more difficult.
The second was May’s Producer Price Index (PPI) that measures inflationary pressures at the producer level of the economy. Today’s release showed a 0.3% decline in the overall index and a 0.2% increase in the more important core reading. These readings hint that inflationary pressures were a little stronger than many had thought, which is negative for bonds and Massachusetts mortgage rates. This is because inflation at the producer level of the economy will likely carry into the consumer level, making long-term securities such as mortgage-related bonds less attractive to investors. The result is binds prices falling and mortgage rates rising.
The third report was May’s Industrial Production. It showed a 1.2% rise in output at U.S. factories, mines and utilities when forecasts were calling for a 0.8% increase. This means that manufacturing activity was stronger than thought and is another negative for Massachusetts mortgage rates.
There are two reports scheduled for release tomorrow, but one of them is the week’s most important and arguably the single most important report we see each month. That is May’s Consumer Price Index (CPI). It is very similar to today’s PPI, but measures inflationary pressures at the more important consumer level of the economy. It is expected to show a 0.1% drop in the overall reading and a 0.1% increase in the core data. A larger than expected increase in the core reading would most likely lead to a noticeable upward change to Massachusetts mortgage rates tomorrow.
May’s Leading Economic Indicators (LEI) will be posted late tomorrow morning. The Conference Board, who is a New York-based business research group, will post this data. It attempts to predict economic activity over the next three to six months. Good news for Massachusetts mortgage rates would a decline in this index, but the CPI is much more important to the markets than this index. Therefore, if the CPI reveals any surprises, this data will likely have little impact on Thursday’s mortgage rates. It is expected to show a 0.5% increase.
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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