Today's Commentary

Updated on December 8, 2016 10:03:21 AM EST
Thursday’s bond market has opened in negative territory this morning due to financial news from overseas. Stocks aren’t having much of a reaction to that news with the Dow up 12 points and the Nasdaq up 1 point. The bond market is currently down 17/32 (2.40%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point. A little strength in bonds late yesterday is softening the impact on this morning’s pricing. If your lender improved rates intraday yesterday, you likely will see a larger increase in this morning’s pricing as that improvement gets reversed also.

Today had only one piece of economic data that was relevant to mortgage rates. At 8:30 AM ET we got last week’s unemployment figures. They showed that 258,000 new claims for unemployment benefits were filed last week. This was a bit higher than the 255,000 that was expected but still a decline from the previous week’s 268,000 initial filings. Declining claims is bad news for bonds and mortgage rates because it points to a strengthening employment sector. However, last week’s number was slightly higher than forecasts. That means we can consider the news neutral towards this morning’s mortgage pricing.

What is really driving this morning’s bond selling was word from the European Central Bank (ECB) that they will extend their stimulus program of buying bonds, but at a slower pace (from 80 billion euros to 60 billion). This tapering announcement indicates the Eurozone central bankers have confidence in their economic growth. That helps fuel optimism about global economic activity, making bonds less attractive to investors. Hence, this morning’s bond selling and upward move in mortgage rates.

Tomorrow morning has one economic report that we will be watching. That will be December's preliminary reading to the University of Michigan's Index of Consumer Sentiment just before 10:00 AM ET tomorrow morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are with their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Tomorrow's release is expected to show a reading of 94.3, which would be an increase from last month's final reading of 93.8. A large decline in confidence would be considered good news for the bond market and mortgage rates.

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.

 ©Mortgage Commentary 2016
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