Friday’s bond market has opened in negative territory following mixed economic data. Stocks are showing moderate gains with the Dow up 62 points and the Nasdaq up 19 points. The bond market is currently down 11/32 (1.84%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point. 11/32 Bonds 30 yr - 1.84% 62 Dow 29,359 19 NASDAQ 9,376
Indexes Affecting Rate Lock LowNegativeHousing Starts (New Residential Construction)December’s Housing Starts kicked off today’s batch of economic releases at 8:30 AM ET, revealing a surprising 16.9% spike in new home groundbreakings. This was much stronger than expected and pushed starts to their best level in 13 years. The report includes multi and single-family starts though. A large contributor to the overall increase was a 29.8% jump in starts of multi-family homes such as condos and apartment buildings. Still, the 11.2% rise in single-family groundbreakings is a healthy rate that indicates housing sector strength. Fortunately, the number of new permits issued that helps predict future starts came in much weaker than expected. Unfortunately, the headline number on this report is enough to have a negative impact on this morning’s bond trading and mortgage pricing even though it is not considered to be highly important. MediumPositiveIndustrial Production and Capacity UtilizationToday’s good news came in December's Industrial Production report at 9:15 AM ET. It showed a 0.3% decline in output at U.S. factories, mines and utilities, meaning the decline is a sign of manufacturing sector weakness. Forecasts were calling for a 0.1% increase in production. Since this is a sign of economic weakness, we can consider this report good news for bonds and mortgage rates. MediumNeutralUniversity of Michigan Consumer Sentiment (Prelim)The final report of the week was the preliminary reading to the University of Michigan's Index of Consumer Sentiment for January. They announced a reading of 99.1 late this morning, down slightly from December’s final reading of 99.3. However, analysts were expecting to see a larger decline in the index. But this was not enough of a variance to cause much concern in the markets and has had little impact on this morning’s mortgage pricing. LowNeutralHoliday ScheduleNext week has very little scheduled that is expected to affect mortgage rates. The stock and bond markets will be closed Monday for the Martin Luther King Jr Holiday and will reopen Tuesday for normal trading hours. There is no early close today ahead of the holiday, but don’t be surprised to see things get quiet as the end of the day nears because some traders are likely to head home for the long weekend. Look for details on what is scheduled next week in Sunday evening’s weekly preview.
Float / Lock Recommendation If I were considering financing/refinancing a 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.