Rate Lock Advisory

Wednesday, June 28th

Wednesday’s bond market has opened in negative territory again. The major stock indexes are showing sizable gains of 117 points in the Dow and 26 points in the Nasdaq. The bond market is currently down 10/32 (2.23%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point if comparing to Tuesday’s early pricing. If your lender made an upward revision intraday yesterday, you may see less of an increase this morning.

10/32

Bonds

30 yr - 2.23%

117

Dow

21,428

26

NASDAQ

6,172

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Unknown

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

Yesterday’s 5-year Treasury Note auction didn’t have much of an impact on yesterday’s mortgage rates. The benchmarks used for gauging investor demand for the securities showed average results. That prevents us from being too optimistic about today’s 7-year Note sale. If there is a strong demand, we could see bond prices rise and mortgage pricing improve later today. However, if there was a lackluster interest from investors, mortgage rates may move slightly higher during afternoon. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon hours.

Medium

Negative

Geopolitical/Financial Issues

There was no relevant economic data posted this morning. The selling in bonds is an extension of overnight weakness and yesterday’s negativity in the market. Comments made by the European Central Bank (ECB) president caused some ripples in the global bond markets yesterday as they construed his words to mean the ECB may start tapering their current bond buying program. Selling in the global markets carried throughout the night and into this morning’s trading here.

Low

Unknown

GDP Rev 2 (month after Rev 1)

Tomorrow has two pieces of economic data, although neither is likely to cause a significant move in the financial or mortgage markets. The first is the second revision to the 1st Quarter Gross Domestic Product (GDP) reading. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this particular data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month's release of the current quarter's initial GDP reading. Last month's first revision showed a 1.2% annual rate of growth in the GDP. Tomorrow's update is expected to show the same. A larger increase in the GDP would be considered negative for rates as it means stronger economic activity.

Low

Unknown

Weekly Unemployment Claims (every Thursday)

Also being posted early tomorrow morning will be last week’s unemployment figures. They are expected to show that 241,000 new claims for benefits were filed, unchanged from the previous week. Ideally, we want to see a large increase in initial claims, indicating employment sector weakness. The higher the number of claims, the better the news it is for mortgage rates. It is worth noting though that this is only a weekly snapshot, so I am not expecting it to have much of an 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.