Rate Lock Advisory

Tuesday, February 20th

Tuesday’s bond market has opened in negative territory as traders return from the holiday weekend. Stocks are starting the new week mixed with the Dow down 132 points and the Nasdaq up 27 points. The bond market is currently down 7/32 (2.89%), which should push this morning’s mortgage rates slightly higher than Friday’s early pricing. The financial markets were closed yesterday in observance of the President’s Day holiday.

7/32


Bonds


30 yr - 2.89%

132


Dow


25,086

27


NASDAQ


7,266

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Neutral


None

There is no relevant economic data being posted today that is expected to affect mortgage rates. The rest of the week brings us only two pieces of moderately important economic data for the bond market to digest along with the minutes from the most recent FOMC meeting. There are also a couple of Treasury auctions that have the potential to influence mortgage rates. A good portion of the week’s calendar takes place tomorrow.

Medium


Unknown


Existing Home Sales from National Assoc of Realtors

The first report is January's Existing Home Sales report by the National Association of Realtors at 10:00 AM ET tomorrow morning. This data tracks home resales throughout the country, giving us a measurement of housing sector strength. It is expected to show a decline in sales of existing homes, meaning the housing sector softened last month. Ideally, the bond market would like to see a sizable decline in sales because weak housing makes broader economic growth more difficult. Since long-term securities such as mortgage bonds tend to thrive during weaker economic conditions, weak housing numbers would be good news for mortgage rates.

Medium


Unknown


Federal Open Market Committee (FOMC) Minutes

Tomorrow also has the release of the minutes from the most recent FOMC meeting. Traders will be looking for any indication of the Fed's next move regarding monetary policy, particularly when the next rate increase may come. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. These minutes may lead to afternoon volatility Wednesday, or they may be a non-factor. However, they do carry the potential to influence mortgage rates, so they should be watched.

Medium


Unknown


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

In addition to this week's economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes tomorrow and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, sales with higher levels of investor demand usually make bonds more attractive to investors and bring additional funds into the bond market. The buying of bonds that follows often translates into lower mortgage rates.

---


Unknown


None

Overall, tomorrow stands out as the most important day due to the moderately important housing report, 5-year Note auction and the release of the FOMC minutes all taking place. None of those events are highly important by themselves, but combined they carry enough significance to cause a noticeable move in mortgage rates. The calmest is likely to be Friday unless stocks stage a strong rally or sell-off. Despite the lack of highly important data, it still would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

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.