Rate Lock Advisory

Friday, September 29th

Friday’s bond market has opened in positive territory following mixed economic news and no overnight progress in Washington DC. Stocks are showing early gains with the Dow up 99 points and the Nasdaq up 169 points. The bond market is currently up 15/32 (4.51%), which with yesterday’s midday rally should improve this morning’s rates by approximately .500 - .750 of a discount point if compared to Thursday’s early pricing. If you saw an intraday improvement yesterday, you should see a smaller improvement this morning.



30 yr - 4.51%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



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

Yesterday’s 7-year Treasury Note auction didn’t go as well as Wednesday’s 5-year Note sale. The benchmarks we use to gauge investor demand indicated a weaker interest in the securities than there was Wednesday. Fortunately, this did little to hurt bond prices or mortgage rates. Bonds had already made a noticeable move from morning levels before the auction results were announced at 1:00 PM ET. There were widespread intraday improvements to mortgage rates reported yesterday, but they certainly were not due to the auction results.



Fed Talk

Fed Chairman Powell’s town hall style meeting with educators late yesterday afternoon turned out to be a non-factor for mortgage rates. The 4:00 PM ET event was too late in the day to affect yesterday’s rates and failed to influence after-hours trading or this morning’s pricing.



Personal Income and Outlays

The first of this morning’s two economic releases was August's Personal Income and Outlays report at 8:30 AM ET. It revealed income and spending both rose 0.4% when those readings were expected to rise 0.5%. They show consumers had more money to spend last month and did spend more than thought, making them a sign of economic strength and bad news for mortgage rates. However, since they fell short of expectations, we can actually put a good news label on them.



Inflation News

More importantly was the Fed’s preferred inflation reading that is in this report. August’s overall Personal Consumption Expenditures (PCE) index rose 0.4%, matching forecasts. The good news came in the more influential core PCE reading that excludes volatile food and energy costs. It rose only 0.1% when it was expected to rise 0.2%. This is just a small variance from what analysts were expecting, but nevertheless any weaker inflation data is good news for bonds and mortgage rates.



Univ of Mich Consumer Sentiment (Rev)

Lastly, September’s revised Index of Consumer Sentiment from the University of Michigan was posted at 10:00 AM ET. They announced a reading of 68.1, up from the preliminary reading of 67.7 earlier this month. The upward revision means surveyed consumers are more optimistic about their own financial situations than previously thought. This is considered bad news for bonds and mortgage rates since rising confidence usually translates into stronger consumer spending that fuels economic growth.



Geopolitical/Financial Issues

This morning’s move in bonds is much more about a reversal in general momentum and concerns about the impact the obvious upcoming government shutdown will have on the economy than it is from this morning’s economic data. The PCE reading is definitely favorable, but the variance from expectations doesn’t appear to be enough to fuel this morning’s gains. In fact, the biggest move higher in bond prices came well after the 8:30 AM report was posted. This is the direction for bonds that makes much more sense than what we saw earlier this week and will hopefully continue into next week.



ISM Index (Institute for Supply Management)

Next week doesn’t have a large number of relevant economic reports and other events scheduled that are expected to impact mortgage rates. Although, most of what is scheduled is considered to be highly important to the financial and mortgage markets. The calendar starts with September’s Institute for Supply Management’s (ISM) manufacturing index late Monday morning and ends with the almighty monthly governmental Employment report early Friday morning. There are a couple of moderately influential events scheduled in between. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.