Rate Lock Advisory

Sunday, January 16th

This holiday-shortened week has only three relevant monthly economic reports for the markets to digest and none of them are considered to be highly important. We also have a Treasury auction that may come into play midweek, but that’s it in terms of standard weekly influences. The stock and bond markets will be closed tomorrow for the Martin Luther King Jr holiday and will reopen for regular trading Tuesday. There will be no update to this report tomorrow.

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Bonds

Market Closed

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Dow

Market Closed

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NASDAQ

Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Unknown

Housing Starts (New Home Construction)

The first item on this week's calendar comes Wednesday morning when December's Housing Starts report is posted at 8:30 AM ET. It will tell us how many new home groundbreakings took place during the month. While this data gives us a small indication of housing sector strength, it is not known to be highly influential on mortgage rates. Accordingly, it will take a large variance from forecasts for the report to have a direct impact on Wednesday’s pricing. Forecasts show a decline in new home sales. A large decline in sales would be considered favorable.

Medium

Unknown

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

Also Wednesday will be the 20-year Treasury Note auction. These auctions show what type of demand investors have for long-term securities. If demand is strong in the sale, particularly from international buyers, we could see the broader bond market improve after results are posted at 1:00 PM ET. On the other hand, lackluster interest in the securities may lead to an upward revision to rates before the end of the day.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

December's Existing Home Sales from the National Association of Realtors is set for release late Thursday morning. This data will give us detailed information about housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show a small decline in sales from November's level, meaning the housing sector softened slightly last month. Ideally, bond traders would like to see a large decline in sales, pointing towards sector weakness because weaker housing makes broader economic growth more difficult. As long as we don't see a significant surprise in sales, it shouldn't have a noticeable impact on mortgage rates.

Low

Unknown

Leading Economic Indicators (LEI) from the Conference Board

The final report of the week will be December's Leading Economic Indicators (LEI) at 10:00 AM ET Friday. The Conference Board, who is a New York-based business research group, compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Friday's release is expected to reveal a 0.7% rise, meaning the indicators are predicting growth in economic activity over the next several months. As long as we don't see a noticeable increase, I don't think this data will have much of an impact on mortgage pricing either.

Medium

Unknown

Corporate Earnings

Also worth noting is the fact that we are heading into corporate earnings season this week. As big-named companies report their results, stocks should react accordingly. Stronger than expected earnings will likely boost stocks and hurt bond prices, pushing mortgage rates higher. Generally speaking, news that is good for stocks is bad for bonds and mortgage rates. However, disappointing results could lead to lower mortgage rates. With little economic data or other events scheduled this week to drive trading, stocks may end up having the strongest effect on rates.

High

Unknown

Bond Trends

Overall, no day stands out as a strong candidate for most active day for rates. Tuesday is a possibility following the long weekend. There is little data for the markets to digest, probably leaving stocks to be the focus several days. We have seen bonds and rates on a serious upward trend over the past couple weeks. Hopefully, the selling will subside this week and mortgage rates can recover some of their recent upward move.

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.

Pathfinder Real Estate Services Inc.

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