Rate Lock Advisory

Thursday, July 24th

Thursday’s bond market has opened in negative territory following conflicting economic data. Stocks are mixed with the Dow down 199 points and the Nasdaq up 12 points. The bond market is currently down 6/32 (4.40%), which should cause an increase of approximately .125 of a discount point in this morning’s mortgage rates.

6/32


Bonds


30 yr - 4.40%

199


Dow


44,811

12


NASDAQ


21,032

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Positive


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

Yesterday’s 20-year Treasury Bond auction went very well with the benchmarks we use to gauge investor demand pointing to a strong interest in longer-term securities. Since mortgage rates are based on long-term debt, we can consider the auction to be good news. Disappointingly, bonds had little reaction to the 1:00 PM ET results announcement. In other words, despite a strong sale, it failed to improve mortgage rates.

Medium


Negative


Weekly Unemployment Claims (every Thursday)

The first of this morning’s two economic releases was last week’s unemployment update that showed 217,000 new claims for unemployment benefits were made, down from the previous week’s 221,000. Since analysts were expecting to see an increase in initial filings and declining claims are a sign of strength in the employment sector, today’s release has to be labeled unfavorable for bonds and mortgage rates.

Low


Positive


New Home Sales

June's New Home Sales report was also released this morning, revealing a 0.6% rise in sales of newly constructed homes. This was a much smaller increase than expected, signaling the new home portion of the housing sector was not as strong as thought. Generally speaking, we can consider the report to be good news for mortgage rates. However, the report covers only a small portion of all home sales in the U.S. and doesn’t carry a high level of importance. This is why it was unable to reverse this morning’s bond weakness.

High


Unknown


Durable Goods Orders

Tomorrow brings us the most important economic report of the week, even though it is not considered to be a key piece of data. June's Durable Goods Orders report tracks news orders for big-ticket products that are expected to last three or more years, such as airplanes, appliances and electronics. Weaker manufacturing activity is generally favorable for the bond market and mortgage pricing. Therefore, a larger than expected decline of 11.0% would be considered good news for rates. A note about this data is that it is known to be extremely volatile from month to month, so a moderate difference between forecasts and the actual reading may not move the markets or mortgage rates like it would if it came in other reports.

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.