Rate Lock Advisory

Thursday, February 22th

Thursday’s bond market has opened well in positive territory, recovering a good part of yesterday’s losses. Stocks are also posting solid gains, pushing the Dow higher by 191 points and the Nasdaq up 43 points. The bond market is currently up 13/32 (2.92%), but yesterday’s late sell-off means we still will see an increase of slightly less than 0.125% of a discount point in this morning’s mortgage rates if comparing to Wednesday’s early pricing. Many lenders revised rates higher yesterday afternoon. Therefore, you may see an improvement in today’s rates if your lender made upwards changes yesterday afternoon.

13/32


Bonds


30 yr - 2.90%

191


Dow


24,989

43


NASDAQ


7,261

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Neutral


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

There were two events yesterday afternoon that were mortgage rate-relevant. The first was the 5-year Treasury Note auction, that drew mediocre interest from investors. The benchmarks we use to gauge investor demand in the securities showed an average level of demand. Results were Posted at 1:00 PM ET and had little impact on the bond or mortgage markets. What it does do though, is prevent us from being too optimistic about today’s 7-year Note auction. Results of it will also be posted at 1:00 PM, so any reaction will come during early afternoon trading.

High


Negative


Federal Open Market Committee (FOMC) Minutes

What did cause the bond market weakness and upward revisions to mortgage rates was the minutes from the January 31st FOMC meeting. While they indicated that there still is a consensus of a need for three rate hikes this year to control economic growth, there is growing concern at the pace inflation is strengthening. It is widely expected that the Fed will make the year’s first bump to key-short term interest rates at next month’s FOMC meeting. As the year progresses, the two additional hikes could change to more or fewer. The minutes give the impression that three additional moves this year is much more likely than two. Accordingly, the bond market reacted negatively, sending yields and mortgage rates higher. This morning’s rebound is recovering a good portion of those losses.

Low


Negative


Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures were released at 8:30 AM ET, revealing 222,000 new claims for unemployment benefits were field. This was a decline from the previous week’s revised 229,000 initial filings, hinting at a strengthening employment sector. Forecasts were calling for an increase in new claims that would have pointed towards weaker employment growth. That means we should consider the data bad news for mortgage rates. Fortunately though, this is only a weekly snapshot and has not had much of an influence on this morning rates.

Low


Negative


Leading Economic Indicators (LEI) from the Conference Board

Also posted this morning was January's Leading Economic Indicators (LEI) at 10:00 AM ET. The Conference Board announced a 1.0% rise in the indicators, meaning they are predicting solid economic growth over the next several months. That was stronger than the 0.8% rise that was expected. As a result, we should consider this data negative for mortgage rates also.

Medium


Unknown


Fed Talk

Tomorrow has nothing of importance scheduled. There are several speaking engagements by current Fed members throughout the day. They always draw attention but often no reaction. If they say anything unexpected, particularly about monetary policy and this year’s rate hikes, we could see their words come into play tomorrow. Other than that, there is little to drive bond trading and 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.