Rate Lock Advisory

Tuesday, August 26th

Tuesday’s bond market has opened in negative territory, but not enough to erase yesterday’s late gains. Stocks are calm with the Dow up 22 points and the Nasdaq down 1 point. The bond market is currently down 3/32 (4.28%). Afternoon strength in bonds yesterday should allow for this morning’s mortgage rates to be approximately .125 of a discount point lower than Monday’s early pricing. If you saw an intraday improvement yesterday, you likely will see no change this morning.

3/32

Bonds

30 yr - 4.28%

22

Dow

45,305

1

NASDAQ

21,449

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

Durable Goods Orders

This morning’s release of July’s Durable Goods Orders report showed new orders for big-ticket products such as appliances, airplanes and electronics fell 2.8% compared to June’s orders. While the decline in new orders indicates weaker manufacturing activity that is favorable for mortgage rates, July’s orders were still better than expected. Forecasts had them falling approximately 4.0%. Furthermore, a secondary reading that excludes more costly and volatile transportation orders (airplanes) came in noticeably stronger than expected. Accordingly, we have to label the report bad news for bonds and mortgage rates.

Medium

Positive

Consumer Confidence Index

August’s Consumer Confidence Index (CCI) was posted late this morning by the Conference Board. The New York-based business research group announced August’s reading at 97.4, but also revised July’s reading upward from 97.2 to 98.7. Analysts were expecting to see a decline in consumer confidence in their personal financial situations. Despite August’s reading coming in higher than expected, it still is a decline from July’s revision. This signals consumers were feeling better about their employment and financial situations last month than they do this month. Because waning confidence usually translates into softer consumer spending, we can label the report slightly favorable for mortgage rates.

Medium

Unknown

Misc Fed

In addition to this morning’s data, there also is a political headline that is worthy of addressing. President Trump’s announcement last night that he was firing Fed Governor Cook raises alarms about the Fed’s independence from political influence. Whether or not he has the ability to do so, and if the questions about how she handled previous mortgage financing are cause for doing so will likely be answered in the courts. However, the thought that the Fed, which was intentionally structured to be apolitical when created, can indeed be affected by whomever controls the White House is a problem on a much larger scale. The Federal Reserve’s actions influence the global markets and economies like no other single entity. Its credibility is largely based on the theory it is made up of a group of independent minds that are free from outside pressure.

Medium

Unknown

Domestic Political Issues

The impact on the markets this morning has been muted so far, but that may just be because the question if the President can indeed remove her has not been answered yet. If she steps down (which she said would not happen) or is removed from her position, we can expect to see a fairly strong negative reaction to the news, even though the person that replaces her is more likely to align with President Trump’s requests and vote in favor of cutting key rates than Governor Cook was. This topic will be in the headlines over the coming days and weeks.

Medium

Unknown

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

Tomorrow doesn’t have any relevant economic data set for release, but there is a Treasury auction scheduled that may come into play during afternoon trading. 5-year Treasury Notes are being sold tomorrow with results being announced at 1:00 PM ET. If the sale goes poorly, meaning a weak interest in the securities, we could see broader selling in the bond market after results are announced. A strong demand from investors would be good news and may lead to a small improvement to mortgage pricing tomorrow afternoon.

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... Lock 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.