Rate Lock Advisory Monday, October 5th Monday’s bond market has opened in negative territory as Friday’s reversal extends into this morning’s session. Stocks are starting the week mixed with the Dow down 117 points and the Nasdaq up 162 points. The bond market is currently down 5/32 (5.30%), but Friday’s late sell-off is going to cause this morning’s mortgage rates to be somewhere between .375 and .625 of a discount point higher than Friday’s morning pricing. It is highly likely you saw an intraday increase Friday afternoon. If that is the case, you should see a smaller increase this morning. 5/32 Bonds 30 yr - 5.30% 117 Dow 51,059 162 NASDAQ 27,352 Mortgage Rate Trend Trailing 90 Days - National Average 30 Year Fixed 15 Year Fixed 5/1 ARM Indexes Affecting Rate Lock MediumPositiveISM Service IndexThe Institute for Supply Management (ISM) gave us their September non-manufacturing index late this morning, also known as the service index. They announced a reading of 54.9 that was a decline from August’s 55.4 and a tad lower than the 55.0 that was expected. The lower reading means surveyed service executives felt business conditions were slightly better in August than last month. Since this is a sign of slower economic activity we can label the report favorable for bonds and mortgage rates. However, the report doesn’t carry enough importance to offset the general negative tone in bonds right now. That has prevented the news from impacting mortgage rates. MediumUnknownFOMC Meeting MinutesOver the remaining four days this week, we will get just one more monthly economic report along with two Treasury auctions and the release of the minutes from last month's FOMC meeting. With such a light calendar, don’t be surprised to see outside factors have a stronger influence on bond market and mortgage rates movement this week. There isn’t much to be optimistic about in this week’s calendar, but we can certainly hope to see calmer days, particularly afternoon trading that will make it harder for rates to move any higher. MediumUnknownTreasury Auctions (5,7,10,20,30 year)There isn’t anything scheduled for tomorrow that has the potential to affect rates. The next relevant event comes Wednesday afternoon when results of the day's 10-year Treasury Note auction are announced at 1:00 PM ET and the FOMC minutes are released at 2:00 PM ET. The auction results will give us an indication for investor demand for long-term securities. Mortgage rates are based on long-term debt, so this sale (and Thursday’s 30-year Bond auction) have the most influence on rates of all the monthly auctions. The FOMC minutes will give us better insight into the Fed’s discussion about key rates last month and their decision to raise them a quarter-point. ---UnknownnoneOverall, no day stands out as a good candidate for most important day for rates. The same can be said about a particularly calm day. The FOMC minutes aren't likely to yield any big surprises and the remaining monthly economic release is considered to be only moderately important to the markets. It may end up being Wednesday afternoon's auction results announcement that draws the strongest reaction in the bond market and mortgage pricing. While it appears to be a light week in terms of expected movement in mortgage rates, it could be something unplanned that may cause a big move in rates. Therefore, it would still be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future even though we are expecting to see far less volatility than we did last week. 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.
Monday’s bond market has opened in negative territory as Friday’s reversal extends into this morning’s session. Stocks are starting the week mixed with the Dow down 117 points and the Nasdaq up 162 points. The bond market is currently down 5/32 (5.30%), but Friday’s late sell-off is going to cause this morning’s mortgage rates to be somewhere between .375 and .625 of a discount point higher than Friday’s morning pricing. It is highly likely you saw an intraday increase Friday afternoon. If that is the case, you should see a smaller increase this morning. 5/32 Bonds 30 yr - 5.30% 117 Dow 51,059 162 NASDAQ 27,352
Indexes Affecting Rate Lock MediumPositiveISM Service IndexThe Institute for Supply Management (ISM) gave us their September non-manufacturing index late this morning, also known as the service index. They announced a reading of 54.9 that was a decline from August’s 55.4 and a tad lower than the 55.0 that was expected. The lower reading means surveyed service executives felt business conditions were slightly better in August than last month. Since this is a sign of slower economic activity we can label the report favorable for bonds and mortgage rates. However, the report doesn’t carry enough importance to offset the general negative tone in bonds right now. That has prevented the news from impacting mortgage rates. MediumUnknownFOMC Meeting MinutesOver the remaining four days this week, we will get just one more monthly economic report along with two Treasury auctions and the release of the minutes from last month's FOMC meeting. With such a light calendar, don’t be surprised to see outside factors have a stronger influence on bond market and mortgage rates movement this week. There isn’t much to be optimistic about in this week’s calendar, but we can certainly hope to see calmer days, particularly afternoon trading that will make it harder for rates to move any higher. MediumUnknownTreasury Auctions (5,7,10,20,30 year)There isn’t anything scheduled for tomorrow that has the potential to affect rates. The next relevant event comes Wednesday afternoon when results of the day's 10-year Treasury Note auction are announced at 1:00 PM ET and the FOMC minutes are released at 2:00 PM ET. The auction results will give us an indication for investor demand for long-term securities. Mortgage rates are based on long-term debt, so this sale (and Thursday’s 30-year Bond auction) have the most influence on rates of all the monthly auctions. The FOMC minutes will give us better insight into the Fed’s discussion about key rates last month and their decision to raise them a quarter-point. ---UnknownnoneOverall, no day stands out as a good candidate for most important day for rates. The same can be said about a particularly calm day. The FOMC minutes aren't likely to yield any big surprises and the remaining monthly economic release is considered to be only moderately important to the markets. It may end up being Wednesday afternoon's auction results announcement that draws the strongest reaction in the bond market and mortgage pricing. While it appears to be a light week in terms of expected movement in mortgage rates, it could be something unplanned that may cause a big move in rates. Therefore, it would still be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future even though we are expecting to see far less volatility than we did last week.
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.