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If I were considering financing/refinancing a home, I would....Float for now.....

April 17th, 2008 12:16 PM

Thursday's bond market has opened down slightly as yesterday's late weakness carried into this morning's trading. The stock markets are showing losses with the Dow down 31 points and the Nasdaq down 15 points. The bond market is currently down 5/32, but weakness late yesterday will push this morning's mortgage rates higher by approximately .375 of a discount point over yesterday's morning rates.

Yesterday afternoon's weakness in bonds was mostly the result a sizable stock rally, but inflation concerns that were mentioned in the Fed Beige Book also contributed. The report showed that the economy continued to weaken and that prices paid for raw materials spiked since the last report. The higher costs for materials usually means higher prices passed on to consumers. That inflation threat is a concern to bond traders because inflation erodes the value of a bond's future fixed interest payments and leads to selling in bonds. That translates into higher mortgag e rates for borrowers.

The Conference Board said that their Leading Economic Indicators (LEI) for March, which attempts to measure economic activity over the next three to six months, rose 0.1% last month. This matched forecasts and has been a non-factor in today's trading and mortgage pricing.

The Labor Department released weekly unemployment claims, saying that 372,000 new claims for benefits were filed. This was up form the previous week, but was close to forecasts. Therefore, it also had no impact on this morning's rates.

There is no relevant data scheduled for release tomorrow. Look for the stock markets to be the biggest influence eon bond trading and mortgage rates. If stocks move higher, binds will likely fall and mortgage rates will inch up. If we see stock weakness, mortgage rates should improve tomorrow.

If I were considering financing/refinancing a home, I would.... Float 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.

©Mortgage Commentary 2008