Rate Lock Advisory

Wednesday, April 23th

Wednesday’s bond market has opened well in positive territory following favorable political headlines. Stocks are rallying on the same news, pushing the Dow higher 1,065 points and the Nasdaq up 641 points. The bond market is currently up 23/32 (4.30%), which should improve this morning’s mortgage rates by approximately .375 - .500 of a discount point.

23/32


Bonds


30 yr - 4.30%

1,065


Dow


40,252

641


NASDAQ


16,942

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low


Negative


New Home Sales

March’s New Home Sales report started today’s scheduled activities at 10:00 AM ET. It showed sales of newly constructed homes exceeded expectations, signaling strength in a small portion of the housing sector. The 7.4% increase in sales was stronger than analysts had predicted. This makes the report bad news for bonds and mortgage rates, but fortunately other headlines are much more relevant than this piece of data, allowing traders to overlook it.

High


Positive


Domestic Political Issues

What is driving this morning’s rally in stocks and bonds are comments from President Trump. He stated that he is not interested in firing Fed Chairman Powell anytime soon and also indicated that the tariff war with China may be backtracked a little, so they won’t be nearly as high in the future as they currently are. Both statements gave a sigh of relief to the markets that feared the negative impacts that removing Chairman Powell and high tariffs would have on the economy. It was believed that if the president could indeed remove the Fed Chair, and did so, the global markets would respond with a massive sell-off. And any reduction in tariffs is looked at as a smaller hurdle for the economy to grow. Both are fueling this morning’s bond and stock markets.

Medium


Unknown


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

We also have the 5-year Treasury Note auction and Fed Beige Book to deal with later today. Results of the auction will be announced at 1:00 PM ET. Good news for rates would be results that indicate a strong demand from investors. If interest in the securities was indeed strong, we may see bonds improve during early afternoon trading, possibly leading to a slight downward revision in rates.

Medium


Unknown


Fed Beige Book

The second afternoon event is the 2:00 PM ET release of the Federal Reserve's Beige Book report that gives feedback from the Fed’s business contacts in each respective region. It is named simply after the color of its cover but is relied upon heavily during the FOMC meetings to make monetary policy decisions. Therefore, any major changes from the last update could cause a reaction in the financial and mortgage markets this afternoon. Of particular interest is information about prices (inflation), spending and how tariffs are affecting activity.

High


Unknown


Durable Goods Orders

Tomorrow has three pieces of economic data that may have an impact on mortgage pricing. March's Durable Goods Orders will be released at 8:30 AM ET that gives us an indication of manufacturing sector strength. This report tracks orders for big-ticket items at U.S. factories. These are products that are expected to last three or more years, such as appliances, electronics and airplanes. Current forecasts show a 1.5% increase in new orders, signaling growth in the manufacturing sector. Weaker manufacturing activity is favorable news for mortgage rates. It is worth noting that this data is known to be volatile from month to month, so a small variance from expectations won’t affect the markets like it would coming in many other reports.

Medium


Unknown


Weekly Unemployment Claims (every Thursday)

Also early tomorrow morning will be the release of last week’s unemployment figures. They are expected to show 220,000 new claims for jobless benefits were filed, up from the previous week’s 215,000. Rising claims are a sign of weakness in the employment sector that makes bonds more attractive to investors. Accordingly, good news for rates would be a larger than predicted number.

Medium


Unknown


Existing Home Sales from National Assoc of Realtors

March's Existing Homes Sales numbers from the National Association of Realtors will be announced at 10:00 AM ET tomorrow. This data gives us another indication of housing sector strength and mortgage credit demand and can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a large decline in home resales because a softening housing sector makes broader economic growth more difficult. Analysts are expecting to see a decrease in sales between February and March. The larger the decline, the better the news it is for bonds and mortgage rates.

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.