Rate Lock Advisory

Wednesday, February 21th

Wednesday’s bond market has opened up slightly following weaker than expected housing news. The major stock indexes are showing noticeable gains of 87 points in the Dow and 50 points in the Nasdaq. The bond market is currently up 2/32 (2.88%), which should improve this morning’s mortgage rates by slightly less than .125 of a discount point.

2/32


Bonds


30 yr - 2.88%

87


Dow


25,052

50


NASDAQ


7,284

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Positive


Existing Home Sales from National Assoc of Realtors

The National Association of Realtors posted January's Existing Home Sales report at 10:00 AM ET this morning, announcing a 3.2% decline in home resales. Analysts were expecting to see an increase from December’s sales, indicating the housing sector was not as strong as many had thought. Because that is a sign of economic weakness, it is good news for bonds and mortgage rates.

Medium


Unknown


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

We also have two afternoon events taking place today that may influence mortgage rates. The first is the 5-year Treasury Note auction results at 1:00 PM ET. This isn’t a highly important event, but these auctions do carry enough importance to affect mortgage rates slightly. What determines whether or not they come into play is the interest level in the securities, particularly from international investors. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions in mortgage rates. On the other hand, sales with higher levels of investor demand usually make bonds more attractive to investors and bring additional funds into the bond market. The buying of bonds that follows often translates into lower mortgage rates. This will be repeated tomorrow with the 7-year Note sale.

Medium


Unknown


Federal Open Market Committee (FOMC) Minutes

Next up is the release of the minutes from the January 31st FOMC meeting. Traders will be looking for any indication of the Fed's next move regarding monetary policy, especially when the next rate increase may come. There will be extreme interest in any discussion of more or fewer rate hikes than currently expected this year. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. These minutes may lead to afternoon volatility, or they may be a non-factor. However, they do carry the potential to influence mortgage rates, so they should be watched.

Low


Unknown


Weekly Unemployment Claims (every Thursday)

Besides the 7-year Note auction, tomorrow also has two minor pieces of economic data scheduled. The first will be last week’s unemployment figures at 8:30 AM ET. They are expected to show that 233,000 new claims for unemployment benefits were filed last week, up from the previous week’s 230,000 initial claims. Since rising claims hint at employment sector weakness, the higher the number the better the news it is for mortgage rates. It is worth noting though, that because this is only a weekly report, it likely will have little impact on tomorrow’s mortgage rates unless it shows a significant variance.

Low


Unknown


Leading Economic Indicators (LEI) from the Conference Board

The final monthly report of the week will be January's Leading Economic Indicators (LEI) at 10:00 AM ET tomorrow morning. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.8% increase, meaning that economic activity should expand in the near future. A smaller increase would be good news for the bond market and mortgage rates. This data is not considered to be highly important, so a sizable variance from forecasts is also needed for it to directly affect mortgage rates.

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.