Rate Lock Advisory

Wednesday, July 24th

Wednesday’s bond market has opened in positive territory again due to more favorable economic headlines and early stock weakness. The major stock indexes are showing sizable losses, pushing the Dow lower by 386 points and the Nasdaq down 358 points. The bond market is currently up 7/32 (4.22%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.



30 yr - 4.22%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



New Home Sales

Wrapping up the easy part of the week’s economic calendar was the release of June’s New Home Sales report at 10:00 AM ET. It revealed a 0.6% decline in sales of newly constructed homes when they were expected to rise. This, along with yesterday’s home resales report, shows the housing sector remains troubled. As a sign of economic weakness, this data is favorable for bonds and mortgage rates.



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

There is also a 5-year Treasury Note auction taking place today. If the 1:00 PM ET results announcement indicates there was a strong demand for the securities, we may see afternoon gains in bonds that could translate into a modest improvement to mortgage pricing. However, a weak demand from investors may cause a slight increase in rates before the end of the day. This scenario will be repeated tomorrow when 7-year Notes are sold.



Gross Domestic Product (GDP)

Tomorrow has three economic reports scheduled for release, two of which are considered highly important. The most influential of the three is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This index is considered to be the benchmark indicator of economic growth or contraction. It is the total of all goods and services that are produced in the U.S. and usually has a strong impact on the financial markets. Current forecasts estimate the economy grew at an annual rate of 1.9% during the April through June months. A stronger GDP number would be bad news for rates since it would mean the economy was stronger than thought. A much weaker growth rate would be very good news and could fuel a sizable improvement in rates.



Weekly Unemployment Claims (every Thursday)

Also at 8:30 AM ET will be the release of last week’s unemployment figures. They are predicted to show 239,000 new claims for unemployment benefits were made, down from the previous week’s 243,000. Rising claims are a sign of weakness in the employment sector, so a number higher than the previous week would be considered favorable news for bonds and mortgage rates. Since this is just a weekly snapshot and the morning’s other two reports are considered to be much more important to the markets, we likely will see this update have little impact on tomorrow’s rates.



Durable Goods Orders

June's Durable Goods Orders report is the third release of the morning, coming at 10:00 AM ET. Analysts are expecting to see a 0.4% increase in new orders. This important data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Examples are airplanes, appliances and electronics. Much stronger than expected orders may lead to higher mortgage rates, assuming the GDP doesn't show any surprises. Worth noting about this data is that it is known to be extremely volatile from month to month, so a moderate difference between forecasts and the actual reading may not move the markets or mortgage rates like it would if came from other reports.

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.