Rate Lock Advisory

Monday, August 31th

Monday’s bond market has opened well in negative territory following weekend headlines regarding the Iran and U.S. war. Stocks are reacting negatively to the same news with the Dow down 364 points and the Nasdaq down 101 points. The bond market is currently down 13/32 (4.76%), which should cause an increase in this morning’s mortgage rates of approximately .375 of a discount point if compared to Friday’s early pricing. If you saw an intraday increase in rates as bonds soured late Friday, you should see a smaller increase this morning.

13/32

Bonds

30 yr - 4.76%

364

Dow

53,195

101

NASDAQ

26,300

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

Iran War Headlines

There is no relevant economic data set for release today- the only day of the week without at least one item listed on the calendar. However, news that Iran and the U.S. have exchanged military attacks for the first time in over a month has led to oil prices jumping, reigniting inflation concerns in the bond market. Inflation erodes a bond’s future fixed interest payments, making them less appealing to investors. This leads to bond yields and mortgage rates moving higher.

Medium

Unknown

None

The rest of the week brings us the release of six monthly and quarterly economic reports for the markets to digest, in addition to the periodic Fed Beige Book report. This week’s economic releases include the typical new month reports, two of which are highly important to the financial and mortgage markets. Those particularly influential reports open and close this week’s calendar with one coming tomorrow morning and the other Friday morning.

High

Unknown

ISM Index (Institute for Supply Management)

August's manufacturing index from the Institute for Supply Management (ISM) will start this week's activities at 10:00 AM ET tomorrow morning. This influential report that measures manufacturer sentiment is expected to have slipped from July's 55.6. A reading above 50 is considered a sign of strength in the manufacturing sector it means that more surveyed manufacturers felt business improved this month than those who felt it had weakened. A lower reading than the predicted 55.2 would be considered good news for bonds and likely lead to an improvement in tomorrow’s mortgage rates.

High

Unknown

Employment Situation

Overall, Friday is the most important day of the week due to the influence of the Employment report, but tomorrow's release of the ISM index can also cause a noticeable change in rates. No day stands out as a good candidate for a calmest day. There is a high probability of it being a volatile week for the markets. Therefore, please proceed cautiously 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... Lock if my closing was taking place between 8 and 20 days... Lock 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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