Rate Lock Advisory

Thursday, November 12th

Thursday’s bond market has opened well in negative territory despite favorable news from this morning’s moderately important economic data. Stocks are showing early losses of 30 points in the Dow and 169 points in the Nasdaq. The bond market is currently down 21/32 (5.07%), which should cause an increase in this morning’s mortgage rates of approximately .375 - .500 of a discount point if compared to Tuesday’s early pricing. The bond market was closed yesterday for the Veteran’s Day holiday.

21/32

Bonds

30 yr - 5.07%

30

Dow

52,455

169

NASDAQ

25,296

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures were released at 8:30 AM ET this morning to give us a small snapshot into the employment sector. They showed 200,000 new claims for jobless benefits were filed last week, up from the previous week’s upwardly revised 191,000. Analysts were expecting to see 195,000 initial filings. Since rising claims are a sign of weakness in the employment sector, we can label this data good news for mortgage rates also.

Medium

Positive

Existing Home Sales from National Assoc of Realtors

October's Existing Home Sales report that was released at 10:00 AM ET revealed the housing sector slowed as elevated mortgage rates keep many buyers on the sidelines. The National Association of Realtors said home resales fell 5.5% last month to their lowest level since August of 2010. A weak housing sector makes broader economic growth more difficult, so we can label the report good news for the bond market and mortgage rates.

High

Negative

Geopolitical/Financial Issues

It is not this morning’s data that is behind the early bond weakness and higher mortgage pricing. It appears comments from President Trump that give the impression a peace deal with Iran is much farther away than some had thought has oil prices spiking higher. In turn, inflation concerns are rising and bring bond yields higher. Bonds are very sensitive to inflation data and related news, so this morning’s headline is a strong negative for bonds and mortgage rates.

Medium

Unknown

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

There is another Treasury auction taking place today. This time it will be 30-year Treasury Bonds being sold with results available at 1:00 PM ET. Good news for the broader bond market and mortgage rates would be a strong demand from investors. However, results of Tuesday’s 10-year Note sale, along with this morning’s geopolitical news, leaves us more pessimistic than optimistic that this auction will go well. If there is a reaction, it will affect rates during early afternoon trading.

High

Unknown

Producer Price Index (PPI)

Tomorrow brings us another major inflation report with the release of October's Producer Price Index (PPI) at 8:30 AM ET. This is the sister release of Tuesday's CPI that showed consumer level inflation was hotter than expected last month, causing a big bond sell-off. Tomorrow’s version measures inflation at the wholesale level of the economy and carries slightly less significance than the CPI but still can be a market-mover. Smaller increases than the predicted 0.4% rise in the overall reading and 0.3% in the core data would be favorable news for bonds 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... 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.