Rate Lock Advisory

Thursday, February 26th

Thursday’s bond market has opened in positive territory despite little in terms of major headlines. Stocks are mixed with the Dow up 108 points and the Nasdaq down 205 points. The bond market is currently up 6/32 (4.02%), which may improve this morning’s mortgage rates modestly if compared to Wednesday’s early pricing.

6/32

Bonds

30 yr - 4.02%

108

Dow

49,590

205

NASDAQ

22,946

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Unknown

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

Yesterday’s 5-year Treasury Note auction had mixed results with some of the benchmarks pointing to a decent demand from investors and others indicating modestly below average interest compared to other recent sales. Bonds had already improved before the results of the sale were announced at 1:00 PM ET and showed little reaction when they were posted. Unfortunately, those late morning gains evaporated during late afternoon trading. Also, results from yesterday’s auction don’t help us in predicting what may happen during today’s 7-year Note sale. We will get the details of today’s sale at 1:00 PM ET, making this another afternoon event for rates. A strong demand from investors would be considered favorable for mortgage pricing.

Medium

Positive

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment numbers were posted early this morning, revealing 212,000 new claims for jobless benefits were made. This was an increase from the previous week’s revised 208,000 initial filings, but fell short of the 215,000 that was expected. Rising claims are a sign the employment sector weakened during the week. Therefore, the increase from the previous week is technically favorable news for rates even though the number a little smaller than expected.

High

Unknown

Producer Price Index (PPI)

Tomorrow brings us the most important release of the week and one of the more important reports that the bond market gets each month. January’s Producer Price Index (PPI) will be released at 8:30 AM ET tomorrow, giving us a very important measurement of inflation at the wholesale level of the economy. Its’ sister release (Consumer Price Index) showed two weeks ago that inflation was softer than expected last month. However, last Friday’s Personal Consumption Expenditures (PCE) indexes told us inflation was hotter than predicted in December. Forecasts are predicting the overall and core January readings will both be up 0.3%, while they slowed 0.4% and 0.3% respectively from December on an annual basis. Good news for rates would be smaller monthly increases and larger annual declines.

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.

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