Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!
Friday’s bond market has opened in positive territory despite stronger than expected economic readings. The stock markets are showing modest gains with the Dow up 26 points and the Nasdaq up 4 points. The bond market is currently up 11/32, which with yesterday’s late strength should improve this morning’s mortgage rates by approximately .375 of a discount point over yesterday’s morning rates.
Today’s major news was the initial reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It was expected to show that the economy shrank at a 1.5% annual rate last quarter, but actually revealed a 1.0% decline. In addition to the stronger than expected reading for this quarter, the 1st quarter’s GDP was revised lower from down 5.5% to down 6.4%. The downward revision is not necessarily good news for bonds and mortgage rates because it is too old to influence trading. However, it does increase the size of the improvement from the 1st quarter to the 2nd quarter, which should be taken as a negative for bonds and mortgage pricing. Fortunately, traders seem to be less concerned with these results than many had expected.
The second report of the day was the 2nd Quarter Employment Cost Index (ECI) that measures employers’ costs for wages and benefits. It also gave us stronger than expected results with a 0.4% increase. This means that wage and benefit costs rose slightly more than analysts had predicted. This is also negative news for the bond market because rising wages can lead to wage inflation that likely spreads to other parts of the economy. But as with the GDP reading, this data is not having much of an impact on today’s trading or rates.
Yesterday’s 7-year Treasury Note auction had mixed results. Some measurements of whether the sale went well or not showed respectable results. But other readings indicated that there was a lackluster interest in the auction. The bond market initially reacted negatively but then managed to bounce back before closing.
Next week is fairly busy with economic postings, bringing us a couple of very important reports. There is relevant data being posted four out of the five days, including Monday morning. Monday’s sole report is July’s ISM manufacturing index. This important index measures manufacturer sentiment about business conditions and is usually the first report we see each month. Look for more details on it and next week’s other events in Sunday’s weekly preview.
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... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Massachusetts borrowers should call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Friday, July 31, 2009
$8000 Tax Credit ends in just 4 months!
The $8,000 first-time buyer tax credit program ends November 30 of 2009. Just 4 months away. That means buyers need to CLOSE on their homes by NOVEMBER 30th in order to receive the tax break.
Details: The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.
The American Recovery and Reinvestment Act of 2009 replaces The Housing and Economic Recovery Act of 2008 which only offered a $7500 tax credit. Also under the previous Housing and Economic Recovery Act of 2008, Home buyers were required to repay the tax credit to the government, without interest, over 15 years or when they sell the house, if there was sufficient capital gain from the sale. If there was insufficient profit, then the remaining credit payback would have been forgiven.
What is the home buyer tax credit? It is a tax refund for 10% of a primary home’s purchase price (up to $8K). The amount not used on your 2009 tax return will be refunded directly to you.
Who is eligible to receive the credit? First-time home buyers and those who have not owned a principal residence in the last three years prior to purchase.
Do income limits apply? Yes. The full amount is given to individuals who make up to $75K and married couples who make up to $150K per year (adjusted gross annual income). The credit amount phases out between $75K and $95K for individuals; $150K and $170K for joint filers.
If you want to take advantage of the home buyer tax credit, contact me to get prequalified for a a mortgage and to discuss your plans. Keep in mind it’s typically 45-60 days to close on a traditional real estate transaction (short sales can take much longer).
Details: The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.
The American Recovery and Reinvestment Act of 2009 replaces The Housing and Economic Recovery Act of 2008 which only offered a $7500 tax credit. Also under the previous Housing and Economic Recovery Act of 2008, Home buyers were required to repay the tax credit to the government, without interest, over 15 years or when they sell the house, if there was sufficient capital gain from the sale. If there was insufficient profit, then the remaining credit payback would have been forgiven.
What is the home buyer tax credit? It is a tax refund for 10% of a primary home’s purchase price (up to $8K). The amount not used on your 2009 tax return will be refunded directly to you.
Who is eligible to receive the credit? First-time home buyers and those who have not owned a principal residence in the last three years prior to purchase.
Do income limits apply? Yes. The full amount is given to individuals who make up to $75K and married couples who make up to $150K per year (adjusted gross annual income). The credit amount phases out between $75K and $95K for individuals; $150K and $170K for joint filers.
If you want to take advantage of the home buyer tax credit, contact me to get prequalified for a a mortgage and to discuss your plans. Keep in mind it’s typically 45-60 days to close on a traditional real estate transaction (short sales can take much longer).
Tuesday, July 28, 2009
Boston Mortgage Rate Commentary 07/28/2009
Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!
Tuesday’s bond market has opened in positive ground following early stock weakness and a weaker than expected consumer confidence reading. The stock markets are showing losses with the Dow down 34 points and the Nasdaq down 6 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.
The Conference Board gave us today’s important data with the release of their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment about their personal financial situations, giving us an idea of consumer willingness to spend. It showed a reading of 46.6 that fell short of forecasts by a couple of points. This is good news for bonds and mortgage rates because a less optimistic consumer is less likely to make a large purchase in the near future, limiting economic growth.
Tomorrow brings us two reports that may influence mortgage rates. The first will come from the Commerce Department when they post June’s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a decline in news orders of 0.5% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates tomorrow morning. If it reveals a much larger than expected decline, mortgage rates should drop. It should be noted that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move mortgage rates much.
The Federal Reserve will release its Beige Book report at 2:00 PM ET tomorrow afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates tomorrow afternoon as a result of this report, but the possibly does exist.
Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. The two most important are tomorrow’s 5-year and Thursday’s 7-year Note sales. The last auctions of the 5-year and 7-year securities were met with very good demand from investors, leading to bond strength following the sales. But there is a record amount of debt being sold this week, so we need to proceed with caution over the next few days. Results of the sales will be posted 1:00 PM ET each day. If investor interest is strong again in Wednesday and Thursday’s sales, 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 during afternoon trading those days.
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 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Tuesday’s bond market has opened in positive ground following early stock weakness and a weaker than expected consumer confidence reading. The stock markets are showing losses with the Dow down 34 points and the Nasdaq down 6 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.
The Conference Board gave us today’s important data with the release of their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment about their personal financial situations, giving us an idea of consumer willingness to spend. It showed a reading of 46.6 that fell short of forecasts by a couple of points. This is good news for bonds and mortgage rates because a less optimistic consumer is less likely to make a large purchase in the near future, limiting economic growth.
Tomorrow brings us two reports that may influence mortgage rates. The first will come from the Commerce Department when they post June’s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a decline in news orders of 0.5% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates tomorrow morning. If it reveals a much larger than expected decline, mortgage rates should drop. It should be noted that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move mortgage rates much.
The Federal Reserve will release its Beige Book report at 2:00 PM ET tomorrow afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates tomorrow afternoon as a result of this report, but the possibly does exist.
Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. The two most important are tomorrow’s 5-year and Thursday’s 7-year Note sales. The last auctions of the 5-year and 7-year securities were met with very good demand from investors, leading to bond strength following the sales. But there is a record amount of debt being sold this week, so we need to proceed with caution over the next few days. Results of the sales will be posted 1:00 PM ET each day. If investor interest is strong again in Wednesday and Thursday’s sales, 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 during afternoon trading those days.
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 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
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