St. Louis Real Estate Blog

Daily Rate Lock Advisory Sept 29, 2008

September 29th, 2008 11:36 AM by Melanie Mitchell - Team Lead/Listing Specialist

 


Monday's bond market has opened up sharply following another stock sell-off that has made the safety of bonds more attractive to investors. The stock markets are showing sizable losses following weekend news of another potential bank issue that has the Dow down 286 points and the Nasdaq down 83 points. The bond market is currently up 37/32, which will likely improve this morning's mortgage rates by approximately .250 - .375 of a discount point.

Today's only relevant economic news was August's Personal Income and Outlays data. It showed that personal income rose more than expected with a 0.5% jump. This was bad news for bonds because it indicates that consumers have more income to spend. However, offsetting that reading was the spending portion of the report that showed no change in spending between July and August. This is good news since the reports was expected to show a 0.2% increase in spending.

Tomorrow's big news is the Consumer Confid ence Index (CCI) for September. This Conference Board index will be posted at 10:00 AM and gives us a measurement of consumer willingness to spend. It is expected to show a decline from last month's reading, indicating that consumers are less likely to make large purchases in the near future. This is good news for the bond market and mortgage rates. Analysts are calling for a reading of approximately 55.0, down from August's 56.9. If we see a larger than expected decline, we should see the bond market move higher and mortgage rates drop tomorrow.

The Institute for Supply Management (ISM) will post their manufacturing index for September late Wednesday morning. This index gives us an indication of manufacturer sentiment. Analysts are expecting little change from last month's 49.9 reading. The 50.0 benchmark is extremely important because a reading below that level means more surveyed executives felt business worsened than those who said it had improved. This data i s important not only because it measures manufacturer sentiment, but it is very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall Wednesday morning.

Overall, it is going to be a very active week in the markets and mortgage rates. The most important day will likely be Friday due to the employment report being scheduled, but tomorrow and Wednesday's data can also fairly heavily influence mortgage rates. With important data being released each day of the week, and what appears to be another volatile week in stocks, I would recommend maintaining contact with your mortgage professional.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was takin g 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 September 29th, 2008 11:36 AM

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