Rate Lock Advisory

Thursday, September 24th

Thursday’s bond market has opened in positive territory following mixed economic data. Stocks are rebounding some from yesterday’s sell-off, pushing the Dow higher by 71 points and the Nasdaq up 65 points. The bond market is currently up 2/32 (0.67%), which should improve this morning’s mortgage rates approximately .125 of a discount point.

2/32

Bonds

30 yr - 0.67%

71

Dow

28,834

65

NASDAQ

10,698

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Unknown

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

Yesterday’s 5-year Treasury Note auction was uneventful with the benchmarks we use to gauge investor demand showing an average level of interest in the securities. The bond market and mortgage pricing had no reaction to the auction results. That leads us to be cautiously optimistic about today’s 7-year Note sale. Results of it will be posted at 1:00 PM ET, meaning if rates react to it, it will happen during early afternoon trading. A strong sale would be considered favorable news for rates even though we are likely to see an insignificant move in rates at best.

High

Positive

Weekly Unemployment Claims (every Thursday)

This morning’s first piece of economic data was last week’s unemployment figures at 8:30 AM ET. They showed that 870,000 new claims for benefits were filed last week, up from the previous week’s revised 866,000. However, forecasts were calling for a decline to 840,000 new filings. The slight increase and higher than expected number of claims indicate the employment sector was weaker than thought last week, making the data good news for bonds and mortgage rates.

Low

Negative

New Home Sales

Also released this morning was August’s New Home Sales report. The Commerce Department announced that sales of newly constructed homes rose 4.7% last month when they were expected to decline. That increase signals a stronger than expected new home portion of the housing sector, making the data unfavorable for mortgage rates. However, this report tracks such a small percentage of all home sales in the U.S. that it does not draw much attention. This morning’s unemployment update carries more significance in the markets, allowing bonds to react to that data instead of the housing news.

Medium

Unknown

Fed Talk

Fed Chairman Powell will finish his three consecutive days of congressional testimony today, speaking to the Senate Banking Committee. His first two appearances failed to move bonds or mortgage rates, although we did see stocks go into selling mode yesterday afternoon. Unfortunately, the selling wasn’t of much help to the bond market like we saw earlier in the week. It is unlikely that today’s appearance will influence mortgage rates, but there is always a possibility when the chairman is speaking publicly.

High

Unknown

Durable Goods Orders

The week’s calendar closes tomorrow with the release of August's Durable Goods Orders report at 8:30 AM ET. This release will give us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Big-ticket products are items that are expected to last three or more years such as airplanes, electronics and appliances. Analysts are expecting to see a 1.2% rise in new orders, pointing towards strength in the manufacturing sector. A sizable decline should help boost bond prices and cause mortgage rates to drop tomorrow because signs of economic weakness make longer-term securities more appealing to investors. However, a much larger than expected increase in new orders will likely help push mortgage rates higher. It is worth noting that this data is known to be quite volatile from month-to-month, so a slight or moderate variance may not affect mortgage pricing like it may in other reports.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.

Portions Copyright © 2020 Pipeline ROI, LLC
Another website by Pipeline ROI