Rate Lock Advisory

Wednesday, October 21th

Wednesday’s bond market has opened in negative territory, extending the recent upward trend in yields. Stocks may be contributing to this morning’s bond weakness with the Dow up 124 points and the Nasdaq up 93 points. The bond market is currently down 10/32 (0.81%), which should push this morning’s mortgage rates slightly higher.

10/32

Bonds

30 yr - 0.81%

124

Dow

28,433

93

NASDAQ

11,611

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)

We have two events scheduled today that may affect mortgage rates, but both come during afternoon trading. The first is the 20-year Treasury Note auction results at 1:00 PM ET. If this sale is met with a strong demand from investors, particularly international buyers, bond prices may rise during early afternoon trading. This could lead to a slight improvement in mortgage pricing. On the other hand, a lackluster interest in the securities may create selling in the broader bond market, causing an upward revision to rates this afternoon.

Medium

Unknown

Fed Beige Book

The second event of the day will be Federal Reserve's Beige Book report that summarizes economic activity through the eyes of business contacts within each Fed region. The Fed relies heavily on this data during their FOMC meetings when making monetary policy decisions, so look for a potential reaction during mid-afternoon afternoon trading. It probably will not cause a major sell off in the stock or bond markets, but the 2:00 PM ET release is still worth watching as it could draw a strong enough of a reaction to change rates slightly.

High

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow has two monthly reports set for release along with the weekly unemployment update. The weekly report could have a bigger influence on the markets than the monthly releases. It is expected to show that 860,000 new claims for unemployment benefits were filed last week, down from the previous week’s 898,000. Rising claims is a sign of a weakening employment sector, meaning the higher the number of initial filings, the better the news it is for mortgage rates.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

September's Existing Home Sales data will be posted at 10:00 AM ET tomorrow. The National Association of Realtors will give us an indication of housing sector strength and mortgage credit demand by tracking home resales. It is expected to show an increase in sales, meaning the housing sector strengthened last month. That would be relatively bad news for the bond market since a stronger housing sector makes broader economic growth more likely and causes bonds to be less appealing to investors. Good news for rates would be a sizable decline in sales that points toward a weaker housing sector.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

The week's calendar closes with September's Leading Economic Indicators (LEI) from the Conference Board late tomorrow morning. This index attempts to predict future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.6% from August's reading. This would indicate that economic activity is likely to strengthen over the next several months. An increase of that size would not be of much concern to the bond and mortgage markets. A smaller rise, or a 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... 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.

Pathfinder Real Estate Services Inc.

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