Rate Lock Advisory

Wednesday, August 12th

Wednesday’s bond market has opened well in negative territory again, due partly to overnight weakness and partly stronger than expected inflation news. Stocks are showing strong gains during early trading, pushing the Dow up 205 points and the Nasdaq up 170 points. The bond market is currently down 9/32 (0.67%), which along with weakness late yesterday should cause this morning’s mortgage rates to be approximately .250 - .375 of a discount point higher than Tuesday’s early pricing. If you saw an intraday increase late yesterday, you should see less of a move higher this morning.

9/32


Bonds


30 yr - 0.67%

205


Dow


27,892

170


NASDAQ


10,953

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Negative


Consumer Price Index (CPI)

Today’s sole relevant report was July's Consumer Price Index (CPI) that revealed a 0.6% rise in both the overall and core readings. These were both well above expectations, indicating inflationary pressures at the consumer level of the economy were stronger than thought. Since rising inflation erodes the value of a bond’s future fixed interest payments and makes them less appealing to investors, this report was bad news for mortgage rates.

Medium


Unknown


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

The first of this week’s two Treasury auctions that we will be watching comes this afternoon when 10-year Notes will be sold. If investor demand for the securities is strong, we could see bonds improve later today, possibly leading to a slight downward revision in mortgage rates. On the other hand, a lackluster interest in the securities may cause an increase in rates. Results will be posted at 1:00 PM ET, meaning if there is a reaction to the auction, it will come during early afternoon trading.

High


Unknown


Weekly Unemployment Claims (every Thursday)

Tomorrow does not have any monthly or quarterly economic reports for the markets to digest, but we will get last week’s unemployment figures at 8:30 AM ET. The weekly updates were practically non-factor in the markets before the pandemic. Now they draw plenty of attention as they give us the most recent snapshot of the employment sector, specifically new claims for unemployment benefits. They are expected to show 1.15 million new claims were filed last week, down slightly from the previous week. Because a high number of claims is a sign of a weak employment sector, the higher the number of new filings, the better the news it is for bonds and mortgage rates.

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.