Rate Lock Advisory

Wednesday, August 23th

Wednesday’s bond market has opened in positive territory following the release of much weaker than expected housing data. Stocks are showing moderate losses during early trading, pushing the Dow lower by 51 points and the Nasdaq lower 15 points. The bond market is currently up 8/32 (2.18%), which should improve this morning’s mortgage rates by slightly less than .125 of a discount point.

8/32

Bonds

30 yr - 2.18%

51

Dow

21,848

15

NASDAQ

6,282

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Positive

New Home Sales

The Commerce Department announced this morning that sales of newly constructed homes fell 9.4% last month, reaching their lowest level in 7 months. Analysts were expecting to see a small increase in sales, meaning that the new home portion of the housing sector was much softer than many had thought. Because a weak housing sector makes broader economic growth less likely, this was good news for bonds and mortgage rates. Unfortunately, this report isn’t considered to be highly important to the markets, preventing a more visible reaction.

Low

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow has two pieces of economic data being posted. The first is last week’s unemployment figures at 8:30 AM ET. They are expected to show that new claims for unemployment benefits rose from 232,000 to 237,000. Good news for mortgage shoppers would be a sizable spike as rising claims is a sign of a weakening employment sector. Since this is only a weekly update, it often has little or no impact on mortgage rates unless it shows a sizable variance from forecasts.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

Next up is that July's Existing Home Sales report at 10:00 AM ET tomorrow. The National Association of Realtors will release this report, giving us another measurement of housing sector strength. It covers a high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show a rise from June's sales, meaning the housing sector strengthened last month. This would generally be bad news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. But unless the increase is much larger than current forecasts, the report will likely have a minimal impact on tomorrow's mortgage pricing.

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... Lock 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.