Rate Lock Advisory

Thursday, October 21th

Thursday’s bond market has opened in negative territory as the negative momentum in bonds continues. Stocks are mixed with the Dow down 76 points and the Nasdaq up 37 points. The bond market is currently down 3/32 (1.67%), but weakness late yesterday is going to cause an increase of approximately .125 - .250 of a discount point in this morning’s mortgage rates.

3/32

Bonds

30 yr - 1.67%

76

Dow

35,533

37

NASDAQ

15,158

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

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

Yesterday afternoon’s scheduled events were not exactly bond friendly. The 20-year Treasury Note auction drew a weak demand from investors compared to other recent sales. When results of the sale were posted at 1:00 PM ET, we saw a negative reaction in bonds. Fortunately, it was not enough of a move to cause an upward change in rates, but today’s pricing reflects that move.

Medium

Neutral

Fed Beige Book

The Fed Beige Book that was posted at 2:00 PM ET reminded traders about rising inflation. There were both positive and negative tidbits in the report. Business contacts in the Fed regions reported modest to moderate economic growth for the most part, but rising prices, worker shortage and supply chain issues are concerning and may restrict growth in the future. In short, there were no major surprises in the report. Therefore, we did not see a noticeable reaction to it in the bond and mortgage markets.

Medium

Neutral

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update started today’s batch of economic releases at 8:30 AM ET. It revealed 290,000 new claims for unemployment benefits were filed last week, down from the previous week’s revised 296,000. A decline in initial filings is considered a sign of strength in the employment sector, making the number bad news for mortgage pricing. However, this was a minor variance from the 300,000 forecasts and comes in a weekly snapshot. This has prevented a stronger reaction this morning.

Medium

Negative

Existing Home Sales from National Assoc of Realtors

September's Existing Home Sales report was released at 10:00 AM ET. The National Association of Realtors announced a 7.0% jump in home resales last month, giving us a sign of strength in the housing sector. Because housing strength makes broader economic growth more likely, we should consider the data to be unfavorable for bonds and mortgage rates.

Medium

Positive

Leading Economic Indicators (LEI) from the Conference Board

Also posted late this morning was September's Leading Economic Indicators (LEI) from the Conference Board. They came in with a 0.2% rise when forecasts were calling for a 0.5% increase. The weaker reading means the indicators are pointing towards slower than thought economic activity over the next several months. As with most data that shows weaker economic activity, this report was good news for rates.

Low

Unknown

Fed Talk

Tomorrow does not have anything of importance scheduled. Fed Chairman Powell will be speaking at 11:00 AM ET, but the topic does not appear to be something that will influence mortgage rates. That said, his words have the potential to be a market mover at any time. This means we will be watching for any surprises.

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.

Affordable Mortgage Financing LLC

6083729222
bjpetroselli@centurytel.net


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