Rate Lock Advisory

Thursday, January 21th

Thursday’s bond market has opened in negative territory, giving back some of yesterday’s late rally. Stocks are flat with the Dow down 15 points and the Nasdaq up 27 points. The bond market is currently down 10/32 (1.11%) but strong gains yesterday afternoon should push this morning’s mortgage rates lower by approximately .125 of a discount point. If you saw an intraday improvement in rates Wednesday afternoon, you may see a slight increase in this morning’s pricing.



30 yr - 1.11%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



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

Yesterday’s 20-year Treasury Note auction was not well received. The benchmarks we use to gauge investor demand showed a below-average level of interest in the securities. Despite the disappointing results, the bond market still managed to stage a late rally that led to a fair number of lenders making an intraday improvement to rates before closing.



Housing Starts (New Residential Construction)

There were two early pieces of economic data posted this morning. One was December's Housing Starts that showed a 5.8% increase in new home groundbreakings last month. This was stronger than expected, indicating growth in the new home portion of the housing sector. That makes the data unfavorable for bonds and mortgage rates.



Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures were also released this morning, revealing 900,000 new claims for benefits were filed last week. Forecasts were calling for around 870,000 claims, but the decline from the previous week’s revised 926,000 new filings shows modest improvement in the sector week over week. Therefore, we can consider the data neutral for mortgage rates.



Geopolitical/Financial Issues

This morning’s data isn’t the cause of the early bond weakness. It is being fueled partly by traders capturing profits from this week’s bond rally and also by comments from the European Central Bank that raises speculation they may be reducing their bond buying program sooner than later. The latter is a sign that the EU economy may be stabilizing, making the safety of bonds less appealing to global investors.



Existing Home Sales from National Assoc of Realtors

Tomorrow has a single economic report that the markets will be watching. December's Existing Home Sales from the National Association of Realtors will be released at 10:00 AM ET tomorrow. This data will give us detailed information about housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show a decline in sales from November's level, meaning the housing sector softened last month. Ideally, bond traders would like to see a large decline in sales, pointing towards sector weakness. This is because weaker housing makes broader economic growth more difficult. However, as long we don't see a significant surprise in its results, it shouldn't have a noticeable impact on 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... Float 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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