Rate Lock Advisory

Tuesday, August 15th

Tuesday’s bond market has opened in negative territory following stronger than expected economic news. Stocks aren’t having much of a reaction to the data, pushing the Dow lower by 5 points and the Nasdaq down 10 points. The bond market is currently down 10/32 (2.25%), which should cause this morning’s mortgage rates to be slightly higher than yesterday’s early pricing.

10/32


Bonds


30 yr - 2.25%

5


Dow


21,988

10


NASDAQ


6,329

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Negative


Retail Sales

The Commerce Department announced early this morning that retail level sales rose 0.6% last month, exceeding forecasts of a 0.3% rise. The report also showed that sales excluding more volatile and costly auto transactions rose 0.5% when analysts were expecting only 0.3%. The readings indicate consumers spent more than thought last month. Because consumer spending makes up a huge part of our economy, the stronger numbers make the report bad news for bonds and mortgage rates.

Low


Unknown


Housing Starts (New Residential Construction)

Tomorrow has two events scheduled that may influence mortgage rates. The first is July's Housing Starts at 8:30 AM ET, giving us an indication of housing sector strength and future mortgage credit demand. It usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. Tomorrow's release is expected to show a slight increase in construction starts of new homes last month. The lower the number of starts, the better the news for the bond market, as it would indicate a weaker than expected new home portion of the housing sector.

Medium


Unknown


Federal Open Market Committee (FOMC) Minutes

The second release will come during afternoon hours. That is when we will get the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed's plans for raising short-term interest rates or reducing their balance sheet. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor. Therefore, be prepared for a move, but not surprised if the impact on rates is minimal.

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... Lock 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.