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Rate Lock Advisory
Wednesday, January 25th
Wednesday’s bond market has opened in positive territory, extending yesterday’s late gains. Stocks are helping the cause with the Dow down 225 points and the Nasdaq down 220 points. The bond market is currently up 9/32 (3.42%), which should lead to an improvement in this morning’s mortgage rates of approximately .250 of a discount point. If you saw an intraday downward revision yesterday, you should see a smaller improvement this morning.
30 yr - 3.42%
Mortgage Rate Trend
Trailing 90 Days - National Average
30 Year Fixed
15 Year Fixed
Indexes Affecting Rate Lock
Treasury Auctions (5,7,10,20,30 year)
We have no relevant economic data to be concerned with today but do have an afternoon event that we will be watching. 5-year Treasury Notes are being auctioned today, followed by 7-year Notes tomorrow. A strong investor demand for the securities could lead to slightly lower rates after results are posted at 1:00 PM ET. If there is a reaction it will come during early afternoon trading and likely be minor with a slight change in rates.
Gross Domestic Product (GDP)
Tomorrow is a whole different ballgame with a slew of releases, including two very important reports. The most influential release will be the initial quarterly Gross Domestic Product (GDP) reading that is considered the best gauge of economic growth or contraction. It is the first of three we will get for the 4th quarter, with this version carrying the most significance. Forecasts show the economy grew at an annual rate of 2.6%, a slower pace than the 3rd quarter’s 3.2% rate. A noticeably weaker economy would be great news for the bond and mortgage markets. However, a larger than expected increase, indicating the economy was stronger than thought, will probably fuel bond selling and lead to higher rates.
Durable Goods Orders
Next is the important Durable Goods Orders report for December, also at 8:30 AM ET Thursday. It helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. These are also known as big-ticket items such as airplanes, appliances and electronics. The data is known to be quite volatile from month-to-month, so a large headline number isn't necessarily a concern. Analysts are expecting to see a 2.9% rise in orders. Even though this an important report, a slight variance likely will have little impact on tomorrow’s mortgage pricing because of the large swings that are common in the data. A much weaker increase would be good news for mortgage rates.
Weekly Unemployment Claims (every Thursday)
Also being released early tomorrow morning is last week’s unemployment update, which is expected to show 205,000 new claims for benefits were filed. Rising initial claims is a sign of a weakening employment sector, meaning the higher the number, the better the news for tomorrow’s mortgage rates.
New Home Sales
December's New Home Sales report is set for release late tomorrow morning. This is the least important report of the week and is the sister release to last week's Existing Home Sales data. It also measures housing sector strength and mortgage credit demand, but usually does not have a significant impact on bond trading or mortgage rates because it covers such a small part of all home sales. Tomorrow's report is expected to show a decline in sales of newly constructed homes, hinting at weakness in the new home portion of the housing sector. The morning’s other two monthly reports will draw much more attention in the markets than this one will.
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.