Rate Lock Advisory

Thursday, September 29th

Thursday’s bond market has opened in negative territory. The stock markets are showing minor losses with the Dow down 31 points and the Nasdaq down 18 points. The bond market is currently down 5/32 (1.58%), which should push this morning’s mortgage rates higher by slightly less than .125 of a discount point.

5/32


Bonds


30 yr - 1.58%

31


Dow


18,307

18


NASDAQ


5,300

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Neutral


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

We saw weakness in bonds late yesterday that caused some lenders to revise rates slightly higher intraday. Yesterday’s 7-year Treasury Note auction took place without much fanfare and was not what pushed bonds lower and mortgage rates higher. The sale appeared to draw an average level of investor interest. Not overly strong or soft. The downward move is extending into this morning’s trading.

Low


Negative


GDP Rev 2 (month after Rev 1)

There were two minor pieces of economic data released this morning, both at 8:30 AM ET. The first was the second revision to the 2nd Quarter Gross Domestic Product (GDP) that came in at up 1.4%. This was an upward revision from the previous estimate of 1.1% and slightly higher than the 1.3% that was expected, indicating the economy was stronger during the April through June months than previously thought. That is technically bad news for bonds and mortgage rates, but because this data is aged now and the current quarter’s reading will be posted next month, the news has had little impact on today’s mortgage pricing.

Low


Negative


Weekly Unemployment Claims (every Thursday)

Also released early this morning was last week’s unemployment figures. They showed that 254,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week’s revised total of 251,000 but fell short of the 259,000 that was expected. The increase is favorable to mortgage rates since rising claims is a sign of a weakening employment sector. However, the fact that fewer claims were made than analysts were expecting forces us to label the news neutral-to-slightly negative.

Medium


Unknown


Personal Income and Outlays

Tomorrow also has two pieces of economic, but they carry more importance than today’s reports did. The first is August's Personal Income and Outlays at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. This is relevant to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. That is negative news for mortgage rates because bonds tend to thrive in weaker economic conditions. It is expected to show an increase of 0.2% in income and a 0.2% increase in spending. If we see weaker than expected readings, the bond market should react positively, leading to lower mortgage rates.

Medium


Unknown


University of Michigan Consumer Sentiment (Rev)

The second report of the day is the University of Michigan's revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed an 89.8 reading. Analysts are expecting to see a slight upward revision, meaning consumer confidence was a bit stronger than previously thought. Waning confidence is good news for bonds because consumers that are concerned about their own financial and employment situations are less likely to make a large purchase in the near future, limiting economic growth. Therefore, a lower than expected reading would be favorable news for bonds and should help improve 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.