Tuesday, September 15, 2009

Daily Rate Lock Advisory 9/14/2009

Daily Rate Lock Advisory 9/14/2009

Monday's bond market has opened in negative territory despite a flat morning in stocks and no economic data on today's calendar. The stock markets are calm with the Dow down 8 points and the Nasdaq nearly unchanged from Friday's close. The bond market is currently down 8/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

This week brings us the release of five relevant economic reports that may influence mortgage rates, but none of them are scheduled for release today. A couple of the reports are considered to be highly important to the financial and mortgage markets, meaning that we may see significant changes to rates this week. There is a very good chance of seeing noticeable changes in rates at least one day, if not several days this week.

There are two highly important reports being released early tomorrow morning. The first is the release of August's Retail Sales report. It will giv e us a measurement of consumer spending, which is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Current forecasts are calling for a 1.9% increase in sales. The sizable jump is expected to come from auto sales that were fueled by the Cash For Clunkers program. Analysts are calling for a 0.4% rise in sales if auto sales are excluded. A larger than expected increase would be considered bad news for bonds and likely lead to an increase in mortgage pricing tomorrow.

The second important piece of data is the release of August's Producer Price Index (PPI), also being posted early tomorrow morning. This report will give us a very important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two because it excludes more volatile food and ene rgy prices. Analysts are currently predicting a 08% increase in the overall index, and a rise of 0.1% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market and lead to an increase in mortgage rates tomorrow morning. Both of the day's reports are considered to be extremely important to the markets and mortgage rates.

Overall, I think we need to label tomorrow as the most important day of the week with the Retail Sales and PPI reports both being posted that day. However, Wednesday's CPI release is also extremely important to the markets, so Wednesday cannot be ignored either. We could see a significant change to rates this week if the major reports vary greatly from forecasts.

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 da ys... 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.

Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com

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