St. Louis Real Estate Blog

August 18, 2008 Daily Rate Lock Advisory

August 18th, 2008 11:26 AM by Melanie Mitchell - Team Lead/Listing Specialist

 


Monday's bond market has opened up slightly following a negative open in stocks. The stock markets are starting the week in the red with the Dow down 56 points and the Nasdaq down 12 points. The bond market is currently up 3/32, which should keep this morning's mortgage rates near Friday's levels.

There is no relevant economic news scheduled for release today. However, there are two reports scheduled to be posted tomorrow morning. The first is July's Producer Price Index (PPI) that gives us an indication of inflation at the producer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is more important because it excludes more volatile food and energy prices that can change significantly from month to month. Current forecasts call for an increase of 0.6% in the overall and 0.2% in the core data reading. A larger increase may renew inflation concerns and push mortgage rates higher tomorrow mo rning. If it reveals smaller than expected increases, we could see mortgage rates improve as a result.

The Conference Board will give us the first data late tomorrow morning when it releases its Leading Economic Indicators (LEI) for July. This index attempts to measure economic activity over the next three to six months. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening. However, a weaker than expected reading means that the economy may slow in the near future, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates tomorrow if the stock markets remain calm.

The second is July's Housing Starts data. This report gives us an indication of housing sector strength and mortgage credit demand. However, it isn't considered to be of high importance to the bond market or mortgage pricing and usually does n't cause much movement in mortgage rates unless it varies greatly from forecasts. It is the least important of the week's reports and is expected to show a sizable drop in new starts.

The Conference Board will give us the last piece of data for the week late Thursday morning when it releases its Leading Economic Indicators (LEI) for July. This index attempts to measure economic activity over the next three to six months. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening. However, a weaker than expected reading means that the economy may slow in the near future, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates tomorrow if the stock markets remain calm. Current forecasts are calling for a decline of 0.2% in the index.

Overall, look for tomorrow to be the busiest day of the week with the P PI being released. The rest of the week will likely be influenced more by stock prices than anything else, which may be quite volatile. Therefore, keep an eye on the markets and maintain contact with your mortgage professional if you have not locked an interest rate yet.

If I were considering financing/refinancing a home, I would.... Float 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.

©Mortgage Commentary 2008
Posted in:General
Posted by Melanie Mitchell - Team Lead/Listing Specialist on August 18th, 2008 11:26 AM

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