Your Daily Mortgage Commentary & Rate Lock Advice for Massachusetts Mortgage Rates
Courtesy of the Massachusetts Mortgage Broker
TUESDAY AFTERNOON UPDATE:
Today’s FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. This was widely expected, but the post-meeting statement did cause some discussion. The Fed left the language in the recent statements that indicate that rates will remain near current levels for some time. This is good news for the bond market and Massachusetts mortgage rates as it means that the Fed is still concerned about an economic recovery.
There is little doubt that the Fed has to raise rates sometime in the future. The question is when. Some analysts feel that it has to be sooner than later to prevent other economic issues down the road. The ultimate goal is for the economy to gradually strengthen so Mr. Bernanke and company can slowly raise interest rates. Raising rates too soon could dampen economic activity by making borrowing more expensive for businesses and consumers. However, waiting too long to raise them could let inflation build momentum, leading to a rapid increase in key rates that also undermines economic growth.
Today’s statement pretty much reiterated recent ones that hint the increases will be later than sooner. Some market analysts believe that is a mistake and that rates need to be raised this year. Others think the employment and housing sectors are still too weak to start raising rates. Who is correct? The future will show us, but in the meantime the debate will continue.
The bond and stock markets have improved from where they were before the statement was released. I would not be surprised to see a small downward revision to Massachusetts mortgage rates shortly as a result of the bond market strength. However, many lenders may opt to wait until tomorrow morning’s rates to reflect that improvement.
February’s Housing Starts was this morning’s only relevant economic data. The Commerce Department reported that construction starts of new homes fell 5.9% last month. The decline can be considered good news for the bond market, but analysts were expecting a slightly larger drop. Also, this data is not considered to be greatly important to the markets or Massachusetts mortgage rates, so its impact on today’s trading has been minimal.
The Labor Department will post February’s Producer Price Index (PPI) early tomorrow morning. This index measures inflationary pressures at the producer level of the economy and considered very important to the markets. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy prices. If the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher Massachusetts mortgage rates tomorrow. Current forecasts are calling for a 0.2% decline in the overall reading and a 0.1% increase in the core data.
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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