Rate Lock Advisory

Thursday, September 17th

Thursday’s bond market has opened in positive territory to recover yesterday’s post-FOMC losses, despite unfavorable economic data. Stocks are rallying, pushing the Dow higher by 252 points and the Nasdaq up 405 points. The bond market is currently up 18/32 (4.94%), which should erase yesterday’s intraday rate increases and leave this morning’s mortgage rates to be slightly lower than Wednesday’s morning pricing.

18/32

Bonds

30 yr - 4.94%

252

Dow

51,714

405

NASDAQ

26,384

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures were posted early this morning, revealing new claims for jobless benefits unexpectedly dropped during the week. The 196,000 initial filings fell well short of the 208,000 that was expected and was the lowest number since the middle of July. Declining claims are a sign of strength in the employment sector, making the report bad news for bonds and mortgage rates. However, the markets are focused much more on inflation and the Fed’s actions than this weekly snapshot, preventing a negative impact on this morning’s mortgage pricing.

Low

Neutral

Housing Starts (New Home Construction)

This morning’s second early release was August's Housing Starts data that showed new home groundbreakings fell 2.6% last month from July’s upwardly revised number. Newly issued permits, which are an indication of future starts, also fell. These headline numbers appear to be good news for bonds and mortgage rates because they indicate weakness in the housing sector. However, starts of single-family homes that are much more relevant to mortgage rates jumped 7.6% last month. The overall decline was led by a heavy drop in starts of multi-family homes such as condos and apartment buildings. Since single-family home groundbreakings exceeded expectations, we have to label the report neutral to slightly negative for rates.

Medium

Unknown

Industrial Production

This week’s calendar comes to a close tomorrow with the release of two more moderately important economic reports. August’s Industrial Production data is set to be posted at 9:15 AM ET, giving us an indication of manufacturing strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting to see production was 0.3% higher than it was in July, a sign that manufacturing activity gained modest momentum last month. A larger increase in production would be negative for bonds and mortgage rates, while a decline would be favorable for mortgage shoppers.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

Then the Conference Board will release their Leading Economic Indicators (LEI) for August at 10:00 AM ET tomorrow. This index attempts to predict economic activity over the next three to six months. Forecasts show a 0.2% increase, meaning the indicators are pointing toward slightly stronger economic activity in the coming months. A decline in the indicators would be favorable news for mortgage pricing, but since this is not a governmental agency, it will take a wide variance from predictions for the data to noticeably impact 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.

Affordable Mortgage Financing LLC

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