Mortgage News for Thursday June 25th 2009

I just found out at AHK we have 3 investors who will do the IRS Down payment Assistance Program using the $8000 tax credit available to new home buyers. I will have more information on this exciting news tomorrow.
Thursday's bond market has opened up slightly despite no highly important economic data on the calendar today and a positive opening in stocks. The stock markets are showing minor gains with the Dow up 34 points and the Nasdaq up 15 points. The bond market is currently up 4/32 from yesterday's close, which should improve this morning's mortgage rates by approximately .250 of a discount point over yesterday's morning rates.

This morning's release of the final reading to the1st Quarter GDP didn't reveal any significant surprises. It showed that the economy contracted at a 5.5% annual rate during the first three months of the year. This was a small upward revision from the previous estimate of a decline of 5.7%, meaning that the economy did not shrink as much as previously thought. However, since this data is old now (second quarter initial reading comes next month), the size of the revision was not enough to influence bond trading or mortgage rates.

The Labor Department gave us last week's unemployment figures, reporting that 627,000 new claims for benefits were filed. This was an increase from the previous week's revised total of 612,000 and much higher than forecasts of 600,000. But, as with today's GDP reading, this data is not considered to be of high importance to the markets or mortgage rates.

Also worth noting is today's 7-year Treasury Note sale. Yesterday's 5-year Note sale went pretty well, but the FOMC statement took center stage during afternoon trading. If today's sale is also met with a good demand from investors, we may see bond prices rise later today and mortgage rates move lower. Results will be posted at 1:00 PM ET.

Tomorrow morning has two reports on its calendar. May's Personal Income and Outlays data will be posted early morning. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

The second report of the day and the last relevant data of the week will come from the University of Michigan who will update their Index of Consumer Sentiment for May. An upward revision from the preliminary reading of 69.0 would be considered a negative for bonds. The earlier data is the more important of tomorrow's two releases.