Rate Lock Advisory

Sunday, October 18th

This week has only three pieces of monthly economic data scheduled for release, none of which are considered to be highly important. In addition to the economic reports there is also a Treasury auction midweek that may come into play during afternoon trading one day. There is nothing set for tomorrow that we need to be concerned about, but weekend headlines regarding attacks on shipping in the Strait of Hormuz and Ukraine attacking Russian refineries may put a little pressure on bonds as the week starts.

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Bonds

Market Closed

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Dow

Market Closed

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NASDAQ

Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Unknown

Housing Starts (New Home Construction)

The week's thin calendar begins late Tuesday morning with the release of September's Housing Starts report at 8:30 AM ET Tuesday. This report will probably not have a heavy impact on the bond market or mortgage rates. It gives us a sign of housing sector strength and future mortgage credit demand by tracking new home groundbreakings in multi-family and single family homes. However, it is considered to be of low importance to the financial and mortgage markets. Analysts are expecting it to show an increase in new home starts between August and September. Due to the lack of market importance, we need to see a significant surprise in this data for it to have a noticeable influence on Tuesday’s mortgage rates.

Medium

Unknown

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

Next on the schedule is Wednesday's 20-year Treasury Bond auction. If this sale is met with a strong demand from investors, particularly international buyers, bond prices may rise during afternoon trading. This could lead to an improvement in mortgage rates shortly after the results are posted at 1:00 PM ET because they are based on long-term debt also. On the other hand, a lackluster interest in the securities may create selling in the broader bond market and lead to a slight upward revision to mortgage rates Wednesday afternoon.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

Thursday’s only monthly release will be September's Leading Economic Indicators (LEI) from the Conference Board at 10:00 AM ET. They are a New York-based business research organization and not a governmental agency, so it rarely causes a big move in rates. This index attempts to predict future economic activity over the next three to six months. Current forecasts are calling for a decline of 0.2% from August's reading, meaning the indicators are pointing towards weaker economic activity over the next several months. A larger decline would be favorable news for mortgage pricing because bonds tend to be more appealing to investors during times of slower economic growth.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

Closing this week’s scheduled activities will be the release of October’s revised Index of Consumer Sentiment from the University of Michigan at 10:00 AM ET Friday. This report is moderately important because it helps us measure consumer confidence in their financial situations and willingness to spend. Analysts are expecting to see the index slip from its preliminary reading of 48.1 posted two weeks ago. A sizable decline, meaning consumers are likely to spend less in the near future, would be good news for rates.

Low

Unknown

Corporate Earnings

We are also in corporate earnings season where publicly traded companies announce their earnings and forward-guidance. These events are really about the stock markets and don’t directly impact the bond or mortgage markets. That said, they can lead to a shift in funds that indirectly lead to changes. For example, strong earnings results usually cause a rally in stocks and make bonds less appealing to some investors. However, disappointing results may lead to stock selling, pushing funds into bonds as a safe haven. As this happens, bond prices rise to push yields and mortgage pricing lower. In short, bad news for stocks can indirectly lead to bond gains.

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Unknown

none

Overall, no day stands out as a clear candidate for most important for rates and the same can be said about predicting the calmest day. There just aren’t enough relevant scheduled events this week to do so. Also worth noting is that the Fed is in their mandatory pre-FOMC quiet period ahead of next week’s meeting. This means we won’t hear any individual Fed-member opinions about the economy or potential monetary policy topics, removing a factor that sometimes leads bond trading during very light weeks. Still, as we have seen several times over the past few weeks, unexpected news can come from anywhere and at any time. Therefore, it would be prudent to keep a close eye on the markets if still floating an interest rate and closing in the near future as we still may get intraday movement in rates this 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... 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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