Rate Lock Advisory

Tuesday, February 20th

Tuesday’s bond market has opened in positive territory following the extended weekend. Stocks are starting the week with losses in the major indexes. The Dow has lost 26 points while the Nasdaq is down 192 points. The bond market is currently up 7/32 (4.25%), which should improve this morning’s mortgage rates by approximately .250 of a discount point if compared to Friday’s early pricing. The financial markets were closed yesterday for the President’s Day holiday.

7/32


Bonds


30 yr - 4.25%

26


Dow


38,601

192


NASDAQ


15,583

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Positive


Leading Economic Indicators (LEI) from the Conference Board

January's Leading Economic Indicators report (LEI) was posted at 10:00 AM ET today. The Conference Board said the indicators pointed to slower economic activity over the next few months. Their LEI fell 0.4% when analysts were expecting to see a 0.3% decline. Weaker economic conditions tend to make long-term securities, such as mortgage bonds, more attractive to investors. Accordingly, we can consider this report to be good news for mortgage rates.

Medium


Unknown


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

Tomorrow doesn’t have any relevant economic data scheduled for the markets to digest. However, there are a couple of afternoon events that may have an impact on mortgage rates. First will be the results announcement of tomorrow’s 20-year Treasury Bond auction at 1:00 PM ET. A strong demand from investors may boost the broader bond market and could cause a slight improvement in rates during early afternoon trading. On the other hand, a lackluster interest in the securities has the potential to cause an upward revision to mortgage pricing.

Medium


Unknown


FOMC Meeting Minutes

The second afternoon event of the day will be the 2:00 PM ET release of the minutes from last month's FOMC meeting. Traders will be looking for any indication of the Fed's next move regarding monetary policy, specifically their discussion about when they still start to lower key short-term interest rates. Recent speeches and economic data have all but eliminated any possibility of the Fed making that move at their March FOMC meeting and lowered the chance of them taking action in May. If there is a strong reaction to the minutes this week, it will probably be a positive one that comes as a result of Fed discussion that hints at a May rate cut. While the truth is, economic data posted since the January meeting likely altered outlooks that were discussed last month, we still may see bond yields and mortgage pricing improve late Wednesday if the minutes seem more optimistic than pessimistic on the subject.

---


Unknown


none

Overall, tomorrow is the best candidate for the most important day for rates while Friday should be the calmest. Despite the lack of economic data that is considered to be highly important, we should still see noticeable movement in rates this week. Generally speaking, rates should be a bit calmer than the past couple of weeks. Keeping in mind that unexpected volatility can happen any day, it would be prudent to still keep an eye on the markets if floating an interest rate and closing in the near future.

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.