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 If you are considering locking in an interest rate for a New York or Florida mortgage, read this post.

Thursday’s bond market has opened in negative territory despite weaker than expected economic data and calm morning in stocks. The stock markets are nearly unchanged from yesterday’s levels with the Dow down 3 points and the Nasdaq up 1 point. The bond market is currently down 7/32, which with yesterday’s afternoon losses will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

December's Durable Goods Orders was posted this morning with the Commerce Department announcing a 2.5% decline in new orders for big-ticket items at U.S. manufacturers. This was well below forecasts of a 1.5% increase, meaning demand for products that are expected to last three or more years was not as strong as thought. This is good news for the bond market, but this data is known to be quite volatile from month to month. Unfortunately, it appears that it was not enough of a surprise to impress bond traders.

The Labor Department gave us last week’s unemployment figures this morning also. They reported that 454,000 new claims for unemployment benefits were filed last week, greatly exceeding forecasts of 410,000. This means that the labor market was weaker than expected, which is also good news for the bond market and mortgage rates. These weekly figures usually don’t influence mortgage rates unless there is a significant surprise. However, traders seem to be more interested in tomorrow’s data than this morning’s because that spike in new claims should have been quite beneficial to the bond market.

Tomorrow has three reports scheduled for release. The first of them is arguably the single most important reports that we see regularly. The initial reading of the 4th Quarter Gross Domestic Product (GDP) will be posted at 8:30 AM ET. This data is so important because it is considered to be the best measurement of economic growth and activity. The GDP itself is the total sum of all goods and services produced in the United States. It's results usually have a major impact on the financial markets and can cause significant changes in mortgage rates. There are three readings to each quarter's activity, each released approximately one month apart. The first reading, which usually carries the most significance, is expected to be an increase of 3.7%. A noticeably weaker reading would be great news for the bond market, questioning the pace of the economic recovery. That would likely fuel stock selling and a rally in bonds that would push mortgage rates lower tomorrow. Bad news would be a stronger than expected reading that would probably lead to bond selling and higher mortgage rates.

The 4th Quarter Employment Cost Index (ECI) is also scheduled for release early tomorrow. It measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. It usually has more of an effect on the bond market than the stock markets. Current forecasts are showing an increase of 0.4%. A lower than expected reading would be favorable to bonds and mortgage rates, but the GDP reading will be the biggest influence on trading and rates tomorrow.

The last report of the week is the revised reading to the University of Michigan's Index of Consumer Sentiment. This index is another measurement of consumer confidence, which is thought to indicate consumer willingness to spend. I don't see this data having much of an impact on the markets or mortgage rates due to the importance of the GDP and ECI readings. It is expected to come in at 73.2. The lower the reading, the better the news for bonds and mortgage pricing.

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... 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.

 Empire Home Mortgage Inc. is a registered Mortgage Broker with the NYS Banking Dept and our loans are arranged through third party providers.