Rate Lock Advisory

Monday, October 18th

Monday’s bond market has opened in negative territory despite quite favorable economic data. Stocks are starting the week in negative ground also with the Dow down 80 points and the Nasdaq down 1 point. The bond market is currently down 8/32 (1.60%), which with late weakness Friday should cause this morning’s mortgage rates to be approximately .250 - .375 of a discount point higher. If you saw an intraday upward revision Friday afternoon, you should see a smaller increase this morning.

8/32


Bonds


30 yr - 1.60%

80


Dow


35,214

1


NASDAQ


14,895

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Positive


Industrial Production and Capacity Utilization

September's Industrial Production data was posted at 9:15 AM ET, revealing a 1.3% decline in output at U.S. factories, mines and utilities. This was much weaker than forecasts, showing a sign of manufacturing weakness. While this is good news for bonds and mortgage rates, it isn’t important enough to offset the negative tone from overnight trading overseas.

Medium


Unknown


None

The rest of the week brings us four more monthly economic reports that the markets will be watching. There is also a Treasury auction that has the potential to slightly affect rates and corporate earnings season kicks off this week. None of the week’s activities can be considered major or significant, but most of what is scheduled carries enough importance to cause minor or moderate changes in mortgage pricing.

Low


Unknown


Housing Starts (New Residential Construction)

Tomorrow has a single release with September's Housing Starts set to be posted at 8:30 AM ET. This Commerce Department report will probably not have a heavy impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand by tracking construction starts of new homes but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a small increase in new home starts between August and September, pointing to strength in the new home portion of the housing sector. We need to see a significant surprise in this data for it to have a noticeable influence on mortgage rates.

Low


Unknown


Corporate Earnings

Also worth noting is corporate earnings season gets into full swing this week. This is when a large number of big-named companies release their quarterly and annual earnings reports. Strong earnings are good news for stocks and bad news for bonds. Generally speaking, if earnings miss expectations, bonds should rally and mortgage rates should move lower. With plenty of them posting this week, stocks could have a heavy influence on bond trading and mortgage pricing.

Medium


Unknown


None

Overall, no day stands out as a clear choice for most important of the week. Thursday is a possibility with two monthly releases and the weekly unemployment update all scheduled, but Wednesday afternoon could see some movement also. Friday is a decent candidate for calmest day for rates. Despite the lack of any key economic data being posted, there still are plenty of events scheduled during the week, meaning we could still see multiple days with a noticeable change in 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.