Rate Lock Advisory

Thursday, September 19th

Thursday’s bond market has opened in negative territory following mixed economic headlines and strong stock gains during early trading. The Dow has jumped 442 points and the Nasdaq is up 431 points, possibly contributing to this morning’s early bond weakness. The bond market is currently down 10/32 (3.74%), but gains just before closing yesterday should prevent much of an increase in this morning’s mortgage rates. If you did get an afternoon improvement in mortgage rates yesterday, you may see a small increase in this morning’s pricing.

10/32

Bonds

30 yr - 3.74%

442

Dow

41,946

431

NASDAQ

18,004

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update was the first of this morning’s three economic releases. The 8:30 AM ET release revealed only 219,000 new claims for unemployment benefits were filed last week, down from the previous week’s revised 231,000. Declining initial claims are a sign of strength in the employment sector, making the data bad news for bonds and mortgage rates.

Medium

Positive

Existing Home Sales from National Assoc of Realtors

The final two reports of the week came at 10:00 AM ET. The National Association of Realtors said in their Existing Home Sales report that home resales fell 2.5% last month. This was a larger than expected drop in sales, bringing them to their lowest level since October of last year. As a sign of weaker housing activity, we can label the report good news for mortgage rates. However, it is worth noting that many analysts are expecting the downward move in mortgage rates over the past month to help boost September’s sales figures. This is likely why we are not getting a stronger positive reaction to offset the unfavorable unemployment figures.

Medium

Neutral

Leading Economic Indicators (LEI) from the Conference Board

Closing out this week’s economic calendar was August’s Leading Economic Indicators (LEI) from the Conference Board. They announced a 0.2% decline, compared to forecasts of 0.3%. This means the indicators are predicting slower economic activity over the next three to six months, but not quite as slow as analysts were predicting. The fact that we did see a decline carries some favorable weight for mortgage rates. Unfortunately, we are not seeing much of a reaction to the data. That is likely a result of the unemployment figures carrying more weight in the markets than this non-governmental report.

Low

Unknown

Stock Influences

There isn’t any data or other releases scheduled for tomorrow that we need to be concerned about. It is a day called Quadruple Witching, which has to do with stock option expirations and other factors that raise the possibility of seeing volatility in the stocks markets. It shouldn’t have a noticeable impact on bond trading or mortgage pricing though.

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.


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