This week is packed with economic data for the financial and mortgage markets to digest. In addition, several of the reports are considered to be of extremely high importance to the financial and mortgage markets. This makes it quite possible that mortgage rates will show considerable movement again this week.

The first important report comes Tuesday morn ing when the Conference Board will post their Consumer Confidence Index (CCI). This index measures consumer sentiment, giving us an idea of consumer willingness to spend. This is important because consumer spending makes up two-thirds of the U.S. economy. If the CCI reading is weaker than expected, we may see bond prices rise and mortgage rates drop Tuesday. Current forecasts are calling for a reading of 104.8, which would lower number than June’s reading.

The Federal Reserve will release its Beige Book report Wednesday 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. With Fed Chairman Ben Bernanke’s testimony last week, I don’t think we will see any significant surprises in this report, and therefore will likely not cause much movement in mortgage rate s Wednesday afternoon.

Thursday morning’s economic data will come from the Commerce Department when they will post June’s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a gain of 1.7% after showing a slight loss in new orders during May. 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 Thursday morning. If it reveals a decline, mortgage rates should drop Thursday morning.

Friday’s first release is the 2nd Quarter Employment Cost Index (ECI) that measures employers’ costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise.

Friday morning also brings us the release of the single most important report we see regularly. The quarterly Gross Domestic Product (GDP) is considered to be the best indicator of economic growth. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating to see a 3.1% pace. A larger increase would probably boost stock prices and hurt bond prices, leading to higher mortgage rates. But a smaller increase would likely fuel a bond market rally.

Also being released Friday is the final revision to July’s University of Michigan Index of Consumer Sentiment. Unless we see a drastic revision to the preliminary estimate of 83.0, I think the markets will probably shrug this news off due to the importance of the GDP.

The week’s data is rounded off with two housing sector related releases Tuesday and Thursday, but I do n’t think they will have much of an impact on the bond market or mortgage rates. June’s Existing Home Sales will be posted Tuesday while New Home Sales will be released Thursday. I would expect that other reports or factors will drive bond trading and mortgage pricing more than these will.

Overall, this is another huge week for the bond market and mortgage rates. If we get weaker than expected economic results, we may see mortgage rates make another leg lower. However, stronger than expected results will likely lead to higher rates for the week. With the bond market near the bottom of its recent trading range, I am holding the lock recommendations for immediate and short-term periods. I suspect that we may see some profit taking by traders, which could drive bond yields and mortgage rates higher.

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 an d 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.

a la mode

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It is the latest twist in the gravity-defying world of the high housing prices and exotic low-rate mortgages: As monthly payments on adjustable-rate mortgages are starting to balloon, many Americans have found a way to put off the day of reckoning.

Betting Everything on the House

They are refinancing with new adjustable-rate mortgages that keep monthly payments low — for now, that is, though their payments will likely rise even higher in the future.

“Some people would say I am a little crazy,” acknowledged R. Lance Perry, 42, of Danville, Calif., one of the new breed of people refinancing their mortgages. But faced with a sharp increase in his monthly payments and a need to take cash out of his home, he refinanced earlier this year to keep his payments the same.

By the time the rate goes up, he figures, his income will have increased enough to cover the higher payments, he will have refinanced again or he will have moved.

Like Mr. Perry, millions of Americans have turned to adjustable-rate mortgages, or A.R.M.’s, in recent years to afford a home as prices soared.

Typically set at artificially low rates in the first years of the loan, these mortgages are then reset at the prevailing interest rates. For borrowers, the bet was that interest rates would remain low.

Now, the first big wave of the mortgage boom is cresting as more than $400 billion worth of adjustable-rate mortgages, or about 5 percent of all outstanding mortgage debt, will readjust this year for the first time, according to Loan Performance, a research firm. Next year, another $1 trillion in loans will readjust.

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Leslie Appleton-Young is at a loss for words.

The chief economist of the California Assn. of Realtors has stopped using the term "soft landing" to describe the state’s real estate market, saying she no longer feels comfortable with that mild label.

"Maybe we need something new. That’s all I’m prepared to say," Appleton-Young said Thursday.

The shift in language comes as debate over the real estate market is intensifying. The long-awaited drop-off is happening, but there’s little agreement about how brutal the landing will be.

Federal Reserve Chairman Ben S. Bernanke said in congressional testimony Thursday that the national housing downturn so far appears orderly.

At about the same time, however, D.R. Horton Inc. Chief Executive Donald Tomnitz was telling analysts that the home builder’s sales in June "absolutely fell off the Richter scale." Horton, the nation’s largest builder of residential housing, has numerous projects in California.

For real estate optimists, the phrase "soft landing" conveyed the soothing notion that the run-up in values over the last few years would be permanent. It wasn’t a bubble, it was a new plateau.

The Realtors association last month lowered its 2006 sales prediction from a 2% slip to a 16.8% drop. That was when Appleton-Young first told the San Diego Union-Tribune that she didn’t feel comfortable any longer using "soft landing."

"I’m sorry I ever made that comment," she said Thursday. "When I get my new term, I’ll let you know."

If there’s one group in California still unreservedly bullish on real estate, it might be the throngs lining up to take the licensing exams.

Latimes

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