Rate Lock Advisory

Monday, March 2nd

Monday’s bond market has opened in negative territory as inflation concerns offset early stock losses. The major stock indexes have actually trimmed their overnight losses, leaving the Dow down 166 points and the Nasdaq down 82 points. Overnight futures trading led us to believe stocks were going to open this morning with much larger losses. This has led to bonds opening much worse than anticipated. It currently is down 23/32 (4.03%), which should cause an increase of approximately .250 - .375 of a discount point in this morning’s mortgage rates.

23/32

Bonds

30 yr - 4.03%

166

Dow

48,811

82

NASDAQ

22,585

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Neutral

ISM Index (Institute for Supply Management)

This week’s economic calendar kicked-off with the release of the Institute for Supply Management’s (ISM) February manufacturing index at 10:00 AM ET. They announced a reading of 52.4 that was close to forecasts of 52.3 and not far from January’s 52.6. The decline of this size indicates manufacturer sentiment was modestly weaker last month than in January. This wasn’t enough of a change to offset the impact the Iran and oil crisis is having on this morning’s bond trading. Accordingly, we are labeling the report neutral for mortgage rates.

High

Unknown

None

The remainder of the week has five more monthly and quarterly economic releases set for release. Two of the remaining batch are considered to be highly important, both coming Friday morning. In addition to the data, we will also get a periodic Fed report and geopolitical news from the Middle East that will drive the markets.

High

Negative

Geopolitical/Financial Issues

Tomorrow doesn’t have any of the data scheduled to be posted, the only day without at least one report. We can expect Middle East news to drive trading until Wednesday’s data is released. We are seeing bonds react negatively to the Iran war headlines sooner than expected. News that oil and container shipments through the Strait of Hormuz have been halted has driven crude oil prices higher this morning. Comments from President Trump that this war is likely to continue more than just a couple days, meaning oil and other energy costs are likely to keep rising, has already translated into inflation concerns in the bond market. This is why we are not seeing the short-term positive reaction we were expecting today.

High

Unknown

Employment Situation

Overall, Friday is the most important day of the week for rates with two highly influential economic reports set for release (Employment and Retail Sales data). The calmest day could be Thursday unless something unexpected happens or new Middle East news hits the wires. It is safe to assume we will see a very volatile week in the markets with plenty of movement in mortgage rates. Therefore, please keep an eye on them if still floating an interest rate and closing in the near future.

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.

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