Mortgage Commentary on Massachusetts Mortgage Rate Trends
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This week brings us the release of three economic reports that are of interest to the mortgage market along with the minutes from the last FOMC meeting and two important Treasury auctions. The week also gets heavy in quarterly earnings releases for companies, which could cause significant movement in the stock markets. The earnings results could affect bond trading as investors move funds into stocks if the reports are good. The other possibility is that earnings would generally disappoint, meaning investors may move funds out of stocks and into bonds as a safe-haven. The latter would be good news for the bond market and Massachusetts mortgage rates.
The bond market is closed tomorrow in observance of the Columbus Day holiday and will reopen Tuesday morning. There will be no update to this report tomorrow due to the bond market being closed. The stock markets are open for trading tomorrow, so their movement is worth watching as a sizable move up or down in the major indexes may influence bond trading and Massachusetts mortgage rates early Tuesday morning. I suspect many mortgage lenders will be closed tomorrow, as will U.S. banks. If anyone is open for business and does post rates tomorrow, you can expect to see an increase of approximately .125 of a discount point from Friday’s morning pricing due to weakness in bonds late Friday afternoon.
The first report of the week comes at 2:00 PM ET Wednesday afternoon when the Fed releases the minutes from their last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over the economy, inflation and the Fed’s next move. If Fed members were concerned about the economy slipping into another recession, we may see the bond market move higher and Massachusetts mortgage rates lower Wednesday afternoon. It will be interesting to see how much debate and disagreement amongst members took place during the meeting. Also, investors will be looking for any indication of what the Fed may do next to help boost economic activity. I suspect that we will see some movement in the markets as a result of this release Wednesday afternoon.
Also Wednesday is the first of two important Treasury auctions this week. The sale of 10-year Notes will be held Wednesday while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as the auctions are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted and Massachusetts mortgage rates may move higher. Those results will be announced at 1:00 PM each sale day.
August’s Trade Balance report will be released early Thursday morning. It gives us the size of the U.S. trade deficit but is the week’s least important report and likely will have little impact on the bond market and Massachusetts mortgage rates. Analysts are expecting to see a $46.1 billion deficit, but it will take a wide variance to directly influence Massachusetts mortgage pricing.
The week closes with two reports being posted Friday morning, one of which is extremely important to the markets and Massachusetts mortgage rates. That one would be September’s Retail Sales report that measures consumer spending. This data is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Therefore, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and Massachusetts mortgage rates should drop. However, stronger than expected sales would fuel optimism about the economy and would likely lead to a stock rally that hurts bonds prices and pushes Massachusetts mortgage rates higher. Current forecasts are calling for a 0.7% increase in sales. Good news for the bond market and Massachusetts mortgage pricing would be a much smaller increase.
The last report of the week is October’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. Good news for the bond market would be a sizable decline in consumer confidence, but due to the importance of the day’s other report, I suspect this data will have little impact on Massachusetts mortgage rates. It is expected to show a reading of 60.0, up from September’s final of 59.4.
Overall, I am expecting to see a fair amount of movement in Massachusetts mortgage rates this week, especially the latter part of the week. The key economic report is Friday’s Retail Sales data but the FOMC minutes also have the potential to heavily influence the markets. Therefore, we can label Wednesday or Friday as the most important day of the week. Also worth noting is the active week for corporate earnings that can cause a great deal of volatility in stocks and Massachusetts mortgage rates any day of the week. Accordingly, please proceed cautiously and maintain contact with your mortgage professional if you have not locked an interest rate yet.
Lock or Float Advice based on Massachusetts Mortgage Rate Trends
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 based on Massachusetts mortgage rate trends. Your individual situation may be different.
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