Rate Lock Advisory

Wednesday, October 18th

Wednesday’s bond market has opened in well negative territory following weakness during overnight trading. Stocks are mixed again with the Dow posting a gain of 101 points while the Nasdaq had slipped 3 points. The bond market is currently down 12/32 (2.34%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

12/32

Bonds

30 yr - 2.34%

101

Dow

23,098

3

NASDAQ

6,620

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Neutral

Housing Starts (New Residential Construction)

September's Housing Starts was released at 8:30 AM ET, revealing a 4.7% decline in new home groundbreakings. This was a larger decline than was expected, indicating the new home portion of the housing sector was softer than thought. However, the decline is being attributed mostly to a sizable drop in multi-family starts. New single-family home groundbreakings actually rose last month. That means we can consider the data neutral to slightly negative because single-family data is more relevant to mortgage rates and it pointed towards economic growth.

Medium

Unknown

Fed Beige Book

We have the Fed Beige Book report coming at 2:00 PM ET this afternoon. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop after its release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we may see mortgage rates revise higher as a result.

Low

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow has two pieces of data for the markets to digest, neither of which carry much importance. At 8:30 AM ET, last week’s unemployment figures will be posted. They will give us a measurement of employment sector strength but are not considered to be key numbers because it is only a weekly snapshot. Analysts were expecting to see that 236,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week’s 243,000 initial filings. Good news would be an increase as rising claims is a sign of weakness in the sector.

Low

Unknown

Leading Economic Indicators (LEI) from the Conference Board

The second report of the day will be September's Leading Economic Indicators (LEI) from the Conference Board at 10:00 AM ET. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.1% from August's reading. This would indicate that economic activity is likely to remain fairly flat over the next couple of months. A small increase would not be of much concern to the bond and mortgage market. A large decline would be favorable to mortgage pricing.

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.