Rate Lock Advisory

Wednesday, February 24th

Wednesday’s bond market has opened in negative territory in another wild early morning session. Stocks are mixed at the moment with the Dow up 54 points and the Nasdaq down 72 points. The mortgage bond market looked like it was going to open with a heavy sell-off but has since recovered a good part of those losses. The 10-year Treasury Note is currently down 17/32 (1.40%), pushing the yield to its highest level in over a year. In a pleasant surprise, bonds rallied yesterday afternoon. That is helping to prevent a sizable increase in this morning’s mortgage rates unless you saw an intraday improvement yesterday. Unfortunately, is you saw an improvement, you likely will see a reversal of it this morning. The net difference should leave rates slightly higher than Tuesday’s early pricing.



30 yr - 1.40%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



New Home Sales

January's New Home Sales report was posted at 10:00 AM ET this morning, revealing a 4.3% rise in sales of newly constructed homes. This was a larger increase than expected, indicating strength in the new home portion of the housing sector. An increase in sales makes the data bad news for rates. However, this particular report is considered to be of low importance since it tracks such a small portion of all home sales. Accordingly, we have seen little reaction to the data during this morning’s trading.



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

The second event of the day will be the first of this week’s two Treasury auctions that we will be watching. 5-year Notes are being sold today while 7-year Notes will be auctioned tomorrow. 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. However, strong investor demand usually makes bonds more attractive to investors and brings funds into the bond market. The buying of bonds that follows often translates into slightly lower mortgage rates. Results of the sales will be posted at 1:00 PM ET auction day, so look for any reaction to come during early afternoon hours.



Fed Talk

Fed Chairman Powell is speaking before the House Financial Services Committee today in day two of the Fed’s semi-annual testimony on the status of the economy. We shouldn’t hear anything new from him, meaning we likely won’t see a move in rates during his testimony. The exception would be something said during the Q&A portion of the proceeding.



Bond Trends

We also should be attentive to afternoon trading. Over the last several sessions bonds have been extremely active, leading to intraday changes to rates multiple days. It was nice to see a positive move yesterday compared to selling most other days. Keep an eye on the markets if still floating an interest rate because there is no reason to believe that this trend is over.



Durable Goods Orders

Besides weekly unemployment figures, we also have two other 8:30 AM ET reports to drive trading tomorrow. January's Durable Goods Orders is one, giving us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. Products such as electronics, refrigerators, airplanes and autos are examples of these big-ticket items. Analysts are expecting to see a 1.2% increase in new orders, hinting at manufacturing sector growth. It is worth noting that this data is known to be quite volatile from month to month, so large swings are common and won't have as much of an impact as it would in many other reports.



GDP Rev 1 (month after initial)

The third release of the morning will be the first revision to the 4th Quarter Gross Domestic Product (GDP) reading. The GDP is considered to be the benchmark indicator of economic growth that comes in a preliminary version followed by two revisions one month apart. This is the second version of last quarter and is expected to be unchanged from the initial 4.0% annual rate of growth. Because bonds are more attractive to investors during times of economic weakness, the bond market and mortgage rates should improve if there is a noticeable downward revision.

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.