Rate Lock Advisory

Sunday, August 14th

This week brings us the release of five pieces of monthly economic data that may influence mortgage rates plus a Treasury auction and the minutes from last month's FOMC meeting. One of those reports is considered to be extremely important to the markets. There is nothing of importance set for tomorrow or Friday, leaving us to focus on the middle days of the week.

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Bonds


Market Closed

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Dow


Market Closed

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NASDAQ


Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low


Unknown


Housing Starts (New Home Construction)

Activities start early Tuesday morning with the release of July's Housing Starts at 8:30 AM ET, giving us an idea of housing sector strength and future mortgage credit demand. It usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. Tuesday's release is expected to show a small decline in new home groundbreakings last month. The lower the number of starts, the better the news for the bond market, as it would hint at a weaker than expected new home portion of the housing sector.

Medium


Unknown


Industrial Production

Also Tuesday morning is the release of August's Industrial Production data at 9:15 AM ET. This report is a measurement of manufacturing sector strength that tracks output at U.S. factories, mines and utilities. It is considered to be moderately important, meaning it can influence mortgage rates if it shows a noticeable variation from forecasts. An increase of 0.3% from July's level of output is what market participants are expecting to see. A larger increase would be negative news for bonds and mortgage rates, while a weaker than expected figure would be considered favorable.

High


Unknown


Retail Sales

The most important economic data of the week will be July's Retail Sales report early Wednesday morning. This Commerce Department report will give us a measurement of consumer spending that is extremely relevant to the markets because it makes up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.2% rise in sales, indicating consumers spent a bit more last month than they did in June. Analysts are expecting to see a 0.1% rise in sales if more costly and volatile auto transactions are excluded. Stronger than expected sales would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would be a sign faster than thought economic growth.

Medium


Unknown


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

Wednesday also has a couple of afternoon events that we will be watching. The first will be results of the day’s 20-year Treasury Bond auction. Results of the sale will be posted at 1:00 PM ET. If investor demand was strong, we could see the broader bond market improve and mortgage rates move slightly lower during early afternoon trading. On the other hand, a lackluster interest could pressure bonds and lead to a slight upward revision to rates before the end of the day Wednesday. Last week's sales were split with the 10-year Note sale drawing a strong demand while 30-year Bonds attracted an average level of interest.

Medium


Unknown


FOMC Meeting Minutes

Finishing Wednesday's calendar will be the release of the minutes from last month’s FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation and future monetary policy moves. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor. Therefore, be prepared for a move, but not surprised if the impact on rates is minimal.

Medium


Unknown


Leading Economic Indicators (LEI) from the Conference Board

In addition to the weekly unemployment update, we will also get July's Leading Economic Indicators (LEI) and Existing Home Sales figures Thursday morning. The Conference Board will give us the LEI at 10:00 AM ET. They are a New York-based business research group and not a governmental agency. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A smaller decline than the 0.5% that is expected would be bad news for the bond market. However, a weaker reading means that the economy may be weaker than predicted, making bonds more appealing to investors.

Medium


Unknown


Existing Home Sales from National Assoc of Realtors

July's Existing Home Sales report is Thursday’s third report. The National Association of Realtors will give us this measurement of housing sector strength. It covers a high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show a decline from June's sales, meaning the housing sector softened a little last month. A weakening housing sector makes broader economic growth less likely. Accordingly, the lower the number of sales, the better the news it is for mortgage rates.

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Unknown


none

Overall, Wednesday is the most important day for rates due to the Retail Sales report and the afternoon events. The calmest may end up being Friday unless something unexpected happens. If still floating an interest rate and closing in the near future, it would be prudent to keep an eye on the markets as they can get active at any time.

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... Float 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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