This week brings us the release of only two relevant monthly economic reports but neither of them is considered to be highly important. There are two important Treasury auctions this week that may influence mortgage rates more than the minor economic data that is scheduled. It is also a holiday-shortened week with the bond market closed Thursday in observance of the Veterans Day holiday. The stock markets will be open Thursday, but bonds will not be traded meaning that many lenders will be closed.
Neither of this week’s monthly economic reports is expected to lead to noticeable changes in mortgage rates. This means that the stock markets will likely be a significant influence on bond trading and mortgage rates in addition to the two particular Treasury auctions. If the stock markets extend their recent rally, we could see funds shift from bonds into stocks that potentially offer better returns. The Dow reached its highest level since September 2008 last week, therefore, all eyes will be watching to see if they can move much higher. If stocks fall from current levels early in the week, concerns about them being able to move much higher in the near future could lead to significant selling. That would make bonds more attractive to investors and lead to lower mortgage rates.
The two important Treasury auctions come Tuesday and Wednesday when 10-year Notes and 30-year Bonds are sold. The 10-year sale is the more important of the two as it will give us a better indication of demand for mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would likely result in upward revisions to mortgage r ates.
The first monthly data of the week is September’s Goods and Services Trade Balance report early Wednesday morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities’ proceeds are worth more when sold and converted to the investor’s domestic currency. However, its results will not likely directly lead to changes in mortgage rates.
November’s preliminary reading of the University of Michigan’s Index of Consumer Sentiment will be released late Friday morning. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 69.0, up from October’s final reading of 67.7. That would be considered neg ative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely.
Overall, it is difficult to predict just how active this week will be for mortgage rates. As expected, last week brought us quite a bit of volatility in rates. This week could be very calm or could be just as active as last week was. I don’t believe the economic data on tap will be a catalyst. I think the key will be the stock markets and Tuesday’s Treasury auction. If they give us favorable results, mortgage rates will likely close the week lower than tomorrow’s opening levels.
If I were considering financing/refinancing a Delaware home, 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 my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
If you are a First Time Home Buyer then you should attend our Free Delaware First Time Home Buyer Seminar . The next seminar is Saturday October 23rd at the Christiana Hilton Hotel in Newark, Delaware from 10 AM till Noon and again from 1:00 PM till 3:00 PM. Please call 302-703-0727 to register or send an e-mail to jthomas@primeres.com.
If you would like to apply for a Delaware Home Loan, you can APPLY ONLINE HERE, you can call John R. Thomas at 302-703-0727 or send an e-mail to jthomas@primeres.com
John R. Thomas – Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd
Newark, DE 19713
http://www.prmidelaware.com/
I am a Delaware native who has been actively involved in the Mortgage and Finance industries for over 10 years. Call me at 302-703-0727