Rate Lock Advisory

Monday, September 28th

Monday’s bond market has opened well in negative territory to give back Friday’s gains. Stocks are showing losses also with the Dow down 205 points and the Nasdaq down 200 points. The bond market is currently down 16/32 (5.22%), which should erase Friday’s intraday improvement in rates and leave this morning’s pricing close to Friday’s early pricing.

16/32

Bonds

30 yr - 5.22%

205

Dow

51,622

200

NASDAQ

26,868

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

Iran War Headlines

Today is the only day of the week without at least one relevant economic report set for release, so it is not data that is fueling the weak open in bonds. The primary reason is that bonds are reversing Friday’s late gains that came from news that Iran had offered a peace deal that would open the Strait of Hormuz. That headline led to a drop in oil prices and a bond rally since reopening the strait would likely help bring inflation down. However, news over the weekend that President Trump called the offer unacceptable puts the crisis back to where we were early Friday with oil much higher and bond yields moving upward to start the week with an increase in mortgage rates.

High

Unknown

None

The remainder of the week brings us the release of seven monthly and quarterly economic reports for the markets to digest. Three of those reports carry a label of highly important to the financial and mortgage markets. As the week progresses, the economic reports get more important. This means that we may see the biggest moves in rates the latter days, assuming new Iran-related headlines don’t control the direction of bond trading before then.

Medium

Unknown

Consumer Confidence Index

September's Consumer Confidence Index (CCI) will kick-off this week's data at 10:00 AM ET tomorrow morning. This Conference Board index gives us a measurement of consumer willingness to spend. A decline from August's reading would mean surveyed consumers felt better about their own financial situations last month than they do this month. This would be good news for bonds and mortgage rates because waning confidence is thought to translate into softer consumer spending numbers and that category makes up over two-thirds of the U.S. economy. The lower the reading, the better the news for rates.

Medium

Unknown

Fed Talk

In addition to this week's economic data, there is also a large number of Fed-member speaking engagements scheduled. Several of these speeches have topics related to economic growth and/or monetary policy that may draw plenty of attention from the markets. The ones most likely to affect rates are scheduled midday tomorrow and early afternoon Thursday.

High

Unknown

Employment Situation

Overall, any day could end up being the most active for mortgage rates with so much data and other influences in the markets this week. Friday is a good candidate due to the significance the Employment report carries in the markets, but Wednesday’s inflation data is likely to draw a strong reaction also if there are any surprises. Furthermore, we saw two unpredictable sell-offs and one big rally last week, all during afternoon trading. There is enough happening this week (scheduled and potentially unknown) that could cause a big move in rates any day. On the same note, no day stands out as a good choice for calmest day. Therefore, it would be prudent to keep an eye on the markets 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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