Weekly Mortgage Update for the week of July 17, 2011...Here's Joe!

The National Association of Realtors will post June's Existing Home Sales figures late Wednesday morning. This report gives us a measurement of housing sector strength and mortgage credit demand, but as with all of this week's data it is not considered highly important. Current forecasts are calling for a small increase in sales from May's totals. A drop in sales would be considered good news for bonds and mortgage rates because a weak housing sector would make it difficult for the economy to recover anytime soon. However, unless this data varies greatly from forecasts it probably will lead to only a minor change in mortgage rates.



June's Leading Economic Indicators (LEI) will be posted at 10:00 AM Thursday. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. It is expected to show a 0.3% increase, meaning that we may see a gain in economic activity over the next few months. A smaller rise in the index would be good news for the bond and mortgage markets.



Overall, this is a moderately significant week for the bond market and mortgage rates. With no highly important economic data to drive the markets and mortgage pricing, we likely will see the stock markets influence mortgage rates. If the major stock indexes rally, funds will probably move away from bonds, driving yields and mortgage rates higher. But weakness in stocks would fuel bond buying and lower mortgage rates for borrowers. I am going to remain pessimistic towards rates, at least near term until the 10-year Note yield remains under 3.00% for some time. It is my opinion that we are more likely to see it move back above 3.00% before we see a new downward trend start. Accordingly, this leads me to remain cautious towards rates, at least for the time being.



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...