Rate Lock Advisory

Thursday, February 12th

Thursday’s bond market has opened in positive territory following favorable economic news. Stocks are mixed with the Dow up 187 points and the Nasdaq down 81 points. The bond market is currently up 6/32 (4.14%), which should improve this morning’s mortgage rates by approximately .125 of a discount point. If you saw an intraday increase yesterday afternoon without getting a correction by the end of the day, you may see a larger improvement this morning.

6/32

Bonds

30 yr - 4.14%

187

Dow

50,308

81

NASDAQ

22,985

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)

Yesterday’s 10-year Treasury Note auction didn’t go as well as hoped. The benchmarks indicated a fairly soft demand for the securities compared to other recent sales, meaning investor appetite for long-term debt may be waning a bit. We saw bonds react negatively to the 1:00 PM ET results announcement, but fortunately they recovered those losses before the end of the trading session. Those results make it difficult for us to be optimistic about today’s 30-year Treasury Bond sale. If the 1:00 PM ET release shows similar results as yesterday, we could see pressure in bonds during afternoon trading that leads to an upward revision in rates. On the other hand, a strong demand has the potential to cause an improvement in mortgage pricing early this afternoon.

Medium

Positive

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update at 8:30 AM ET was the first of this morning’s two relevant economic reports. It revealed 227,000 new claims for jobless benefits were filed last week. This was a little higher than the 222,000 that was expected, but still a decline from the previous week’s revised 232,000 initial claims. The week-over-week decline is a sign of strength in the employment sector. However, the fact that the number of claims came in higher than expected is good news for rates.

Medium

Positive

Existing Home Sales from National Assoc of Realtors

The National Association of Realtors said late this morning that home resales dropped 8.4% to surprise many analysts. A decline from December was expected due to bad weather across a good part of the country. However, the size of the decline despite a dip in mortgage rates indicates weakness in the housing sector. Because housing sector weakness makes broader economic growth more difficult, this report is good news for bonds and mortgage rates.

High

Unknown

Consumer Price Index (CPI)

This week’s economic calendar comes to a close early tomorrow morning with the release of the highly influential Consumer Price Index (CPI) for January. It measures inflationary pressures at the consumer level of the economy last month, to which bonds are very sensitive about. The core data is more important to market participants than the overall reading because it excludes more volatile food and energy prices. They are expected to show an increase of 0.3% for January in both the overall and core readings. The year-over-year readings are expected to decline slightly from December's rate. Good news for bonds and mortgage pricing would be smaller monthly increases that would likely lead to a larger than predicted decline in the annual readings. A slower rate of inflation makes long-term securities, such as mortgage bonds, more attractive to investors and should help contribute to lower 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... Lock 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.