Here is next week’s market forecast! This week was a great week for rates so long as you locked in before Thursday. I managed to get quite a few locked in or re-negotiated down to 3.25%!
As always, I am available all weekend on my cell to answer any questions regarding rates or pre-approvals.
Also, if you have any transactions that might be turning “sideways” or are at a rate higher than 3.5%, I am still able to start, lock, underwrite and fund loans and still close this month!
Market Comment
Mortgage bond prices finished the week lower which pushed rates higher. Rates were quiet throughout the first portion of the week as euro zone weakness dominated the headlines. Stronger than expected data the latter portion of the week caused a spike in rates. Higher than expected ISM Index data started the negative trend. The biggest rate increases came Friday morning following the employment report. Unemployment came in at 7.8%, considerably lower than the expected 8.2% mark. This shocked the financial markets. Stocks extended their gains and mortgage bond prices fell which pushed rates higher. Mortgage interest rates finished the week worse by about 5/8 of a discount point as a result.
LOOKING AHEAD
| Economic | Release | Consensus | |
| 3-year Treasury Note Auction | Tuesday, Oct. 9, | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 10-year Treasury Note Auction | Wednesday, Oct. 10, | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Fed “Beige Book” | Wednesday, Oct. 10, | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Oct. 11, | 362k | Important. An indication of employment. Higher claims may result in lower rates. |
| Trade Data | Thursday, Oct. 11, | $43.5b deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| 30-year Treasury Bond Auction | Thursday, Oct. 11, | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Friday, Oct. 12, | Up 0.9%, | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Oct. 12, | 76.8 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Stocks and Bonds Remain Volatile
Last week, mortgage interest rates rose sharply following the lower than expected unemployment figure. As the US economy moves along and world economies struggle, the demand for the lower yielding government-backed debt securities has whipsawed considerably. One day we see a flight to quality influx of investor funds, which drive prices up and rates down. The next day the inverse occurs.
The US stock market was on a roar the latter portion of the week at the expense of demand for mortgage-backed securities. As the stock market gained strength, investors sought higher returns by moving their money out of the bond market and into the higher yielding stock market. The whipsaw trading environment is likely to continue.
A cautious approach is necessary to protect against extreme short-term market volatility resulting in increased interest rates considering the improbability of accurately determining how the market will react on a short-term day-to-day trading basis. Taking advantage of the historically favorable interest rates at their current levels makes sense in this environment. We have seen in the last few weeks that lower rates are not always a given, even with the Fed spending $40b per month to buy mortgage-backed securities.
Mark Ruhl
NMLS #105591 | Loan Officer
Mortgage Express
Direct 503.517.9341
Cell 503.317.7620
Fax 971.244.LEND
*This electronic mail could contain confidential or privileged information and unauthorized use, copying or distribution other than by the intended recipient is prohibited. In the event you received this communication in error, please notify the sender. Equal Housing Lender
No comments:
Post a Comment