Tuesday’s bond market has opened in positive territory despite stronger than expected housing news. The stock markets are reacting as we would expect with the Dow up 69 points and the Nasdaq up 27 points. The bond market is currently up 3/32 (1.53%), which should keep this morning’s mortgage rates very close to yesterday’s morning pricing.
Today’s only relevant economic data was July's New Home Sales report at 10:00 AM ET. The Commerce Department announced a 12.4% jump in sales of newly constructed homes, exceeding forecasts and push sales to their highest level since October 2007. That increase indicates the new home portion of the housing sector is stronger than many had thought, making the data bad news for bonds and mortgage rates as it is a sign of economic growth.
Tomorrow also has only one piece of economic data that may influence mortgage rates. That would be the sister report to today’s release, July's Existing Home Sales report. The National Association of Realtors will release this data and 10:00 AM ET tomorrow, giving us another measurement of housing sector strength. It covers a very high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show a small decline from June's sales, meaning the home resale sector softened slightly last month. This would generally be good news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. But unless the decline is much larger than current forecasts, the report will likely have a minimal impact on tomorrow's mortgage pricing.
Tomorrow also has the first of this week’s two Treasury auction that may affect bond trading and mortgage rates. There are auctions several days, but the two relevant ones are tomorrow's 5-year Note and Thursday's 7-year Note sales. Results of these will be posted at 1:00 PM ET each day. If investor interest is strong in the auctions, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates tomorrow and Thursday afternoons.
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 taking place between 21 and 60 days... Lock 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.
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