Rate Lock Advisory

Wednesday, February 22th

Wednesday’s bond market has opened in positive territory despite stronger than expected housing news. The stock markets are calm with the Dow down 4 points and the Nasdaq down 7 points. The bond market is currently up 7/32 (2.40%), which should improve this morning’s mortgage rates slightly.

7/32


Bonds


30 yr - 2.40%

4


Dow


20,738

7


NASDAQ


5,858

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Negative


Existing Home Sales from National Assoc of Realtors

The National Association of Realtors gave us January’s Existing Home Sales report at 10:00 AM ET this morning. They announced a 3.3% rise in home resales last month, exceeding forecasts and pushing sales to their highest level since February 2007. Since sales beat expectations, pointing towards housing sector strength, we should consider this data negative for bonds and mortgage rates. Fortunately, this is only a moderately important report and has had a minor impact on today’s trading.

Medium


Unknown


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

Today also has the first of this week’s two Treasury auctions that may influence mortgage pricing. 5-year Treasury Notes will be auctioned today, followed by a 7-year Note sale tomorrow. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates. Results will be posted at 1:00 PM ET, so this will be an afternoon event.

Medium


Unknown


Federal Open Market Committee (FOMC) Minutes

The minutes from the most recent FOMC meeting will also be posted this afternoon. Traders will be looking for any indication of the Fed's next move regarding monetary policy, particularly when the next rate increase may come. They will be released at 2:00 PM ET, therefore, any reaction will come during mid-afternoon trading. These minutes may lead to afternoon volatility, or they may be a non-factor. However, they do carry the potential to influence mortgage rates so they should be watched.

Low


Unknown


Weekly Unemployment Claims (every Thursday)

Besides the 7-year Note sale, the only other mortgage-relevant event tomorrow is the weekly unemployment update at 8:30 AM ET. It is expected to show that 242,000 new claims for unemployment benefits were filed last week, up from the previous week’s 239,000. The larger the number of new claims, the better the news it is for bonds and mortgage rates because rising claims is a sign of a softening employment sector. This is only a weekly snapshot of the sector, so its influence on mortgage rates is often weak unless it shows a significant variance from forecasts.

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.