Rate Lock Advisory

Thursday, October 22th

Thursday’s bond market has opened in positive territory despite mixed headlines. Stocks are heavily contributing to this morning’s bond strength with the Dow down 126 points and the Nasdaq down 431 points. The bond market is currently up 23/32 (5.03%), which should improve this morning’s mortgage rates by approximately .250 of a discount point. If you saw an intraday increase in pricing late yesterday, you will likely see a larger improvement this morning.

23/32

Bonds

30 yr - 5.03%

126

Dow

52,729

431

NASDAQ

26,271

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Low

Negative

Treasury Auctions (5,7,10,20,30 year)

Yesterday’s 20-year Treasury Bond auction drew a relatively weak demand from investors according to the benchmarks in the results posting. Bonds had already lost ground between morning pricing and the 1:00 PM ET results release, but extended that move shortly afterward. The latter was enough to cause some lenders to revise mortgage pricing slightly higher before the end of the day.

Medium

Negative

Weekly Unemployment Claims (every Thursday)

The first of this morning’s two economic releases was last week’s unemployment update at 8:30 AM ET. It revealed 194,000 new claims for jobless benefits were filed last week. This was a decline from the previous week’s upwardly revised 200,000 initial claims, making the data bad news for bonds and mortgage rates. Fortunately, this is just a weekly snapshot that varied a little from expectations. That has prevented the report from having a negative impact on this morning’s rates.

Low

Negative

Leading Economic Indicators (LEI) from the Conference Board

Also released this morning was September’s Leading Economic Indicators (LEI). The Conference Board announced there was no change from August’s reading when analysts were predicting a 0.2% decline. These indicators attempt to predict economic growth over the next three to six months, so a decline would have been the best scenario for the bond market and mortgage rates. That said, this came from a business research group and not a governmental agency, so its influence on this morning’s trading has been minimal. It wasn’t enough of a variance and carries too little importance to raise alarm.

Medium

Positive

General Bond Trends

It is not this morning’s data that is fueling today’s early strength in bonds as they looked like they were going to open strong long before the reports were released. While today’s headlines are technically mixed in terms of what is traditionally considered to be favorable and unfavorable for bonds and mortgage rates, the favorable side is taking the early win. Concerning news includes reports that Israel and the U.S. already have plans for military action against Iran after the mid-term elections, which has oil prices moving higher. As we know all too well, this contributes to rising inflation and the debate about what the Fed will do with key short-term interest rates. However, negative stock reactions to corporate earnings from last night are causing heavy selling in stocks this morning. This has created a flight-to-safety move where investors move funds into bonds to escape the volatility in stocks, to the benefit of mortgage shoppers.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

October’s revised Index of Consumer Sentiment from the University of Michigan will close this week’s economic calendar at 10:00 AM ET tomorrow. This report is moderately important because it helps us measure consumer confidence in their financial situations and willingness to spend. Analysts are expecting to see the index slip from its preliminary reading of 48.1 posted two weeks ago. A sizable decline, meaning consumers are likely to spend less in the near future, would be good news for bonds and mortgage rates since consumer spending makes up over two-thirds of the U.S. economy and bonds tend to thrive in weaker economic conditions.

Float / Lock Recommendation

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.