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



This holiday shortened week brings us the release of five relevant economic reports for the markets to digest along with the last FOMC meeting's minutes and two potentially important Treasury auctions. All of the week's data is being posted over three days due to the Thanksgiving holiday, so the first part of the week should be interesting for mortgage shoppers.



October's Existing Home Sales data will be posted by the National Association of Realtors late tomorrow morning. It gives us a measurement of housing sector strength and mortgage credit demand by tracking home resales. This report is expected to show a decline in sales, meaning the housing sector weakened last month. That would be good news for the bond market and mortgage pricing, but unless it shows a significant surprise, it will likely not have a major impact on tomorrow’s mortgage rates.



Tuesday has the first revision to the 3rd Quarter Gross Domestic Product (GDP). It is expected to show little change from last month's preliminary reading of a 2.5% annual rate of expansion. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic activity. Current forecasts call for a reading of approximately 2.4%, meaning that there was slightly less economic growth during the third quarter than previously thought. This would be good news for the bond market and mortgage rates, but it will likely take a larger decline to improve mortgage rates Tuesday morning.



Also worth noting is the release of the minutes from the last FOMC meeting Tuesday afternoon. Traders will be looking for any indication of the Fed's next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. This release is one of those that may cause some volatility in the markets after they are posted, or could be a non factor. If they show anything surprising, we may see some movement in rates Tuesday afternoon, but it is more likely there will be little reaction since Fed Chairman Bernanke held a press conference following the most recent meeting.



There are three monthly reports scheduled for Wednesday morning. October's Durable Goods Orders is the first and will be posted at 8:30 AM ET. This data helps us measure manufacturing strength by tracking orders for big ticket items, but is known to be quite volatile from month to month. It is expected to show a 1.0% decline in new orders. A larger than expected drop would be considered good news for the bond market and mortgage rates as it would indicate manufacturing sector weakness.



The second is October's Personal Income and Outlays data. This data measures consumers' ability to spend and their current spending habits. This is important because consumer spending makes up two thirds of the U.S. economy. It is expected to show that income rose 0.3% and that spending increased 0.3%. Smaller than expected readings would mean consumers had less money to spend and were spending less than thought. That would be good news for bonds and could lead to improvements in mortgage rates.** The revised November reading to the University of Michigan Index of Consumer Sentiment will be posted late Wednesday morning. It will give us a measurement of consumer willingness to spend. If confidence is rising, consumers are more apt to make a large purchase in the near future, fueling economic activity. Analysts are expecting to see little change to the preliminary reading of 64.2. Unless we see a significant variance from the forecasted reading, I don't think this data will cause much movement in mortgage rates Wednesday.



In addition to this week's economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5 year Treasury Notes Tuesday and 7 year Notes on Wednesday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions in mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into the bond market. The buying of bonds that follows often translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET auction day, so look for any reaction to come during afternoon hours.



The financial markets will be closed Thursday in observance of the Thanksgiving Day holiday. There will not be an early close Wednesday ahead of the holiday, but they will close early Friday and will reopen next Monday morning. I suspect that Friday will be a very light day in bond trading as many market participants will be home. Banks have to be open Friday, but we will likely see little change to mortgage rates that day.



Overall, I believe that we will see more volatility in the markets and mortgage rates the first couple days of the week. The most important day will probably be Wednesday, while the least important will be Friday. As we have seen recently, the markets can get pretty active at any time, so please be careful and maintain contact with your mortgage professional if you have not locked an interest rate yet.



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... 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 New York and Florida State Banking Departments and our loans are arranged through third party providers.

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