Rate Lock Advisory

Monday, September 21th

Monday’s bond market has opened well in positive territory despite the lack of relevant economic data to drive trading. Stocks are certainly contributing to this morning’s early bond buying by showing significant losses, pushing the Dow down 706 points and the Nasdaq down 190 points. The bond market is currently up 14/32 (0.65%), but weakness late Friday is going to prevent much of a change in this morning’s rates if comparing to Friday’s early pricing. If you did see an intraday increase Friday afternoon, you should see an improvement this morning of about the same size.



30 yr - 0.65%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Stock Influences

We are seeing a typical correlation between stocks and bonds this morning. Generally speaking, what is bad news for stocks is usually considered good news for bonds. As stocks go into selling mode, funds are often shifted into bonds that are considered safer. This is known as a Flight to Safety. The good news is that this should cause mortgage rates to move lower if the stock selling continues this week. On the other hand, the risk is that once stock traders get over whatever it is they are reacting to, stocks may rebound and draw funds away from bonds. That scenario would likely erase the rate improvements we saw as stocks were dropping. The key is whether or not this is a one-day sell-off in stocks or the beginning of a larger downward move.




Today doesn’t have anything of importance other than a couple of speaking engagements by current Fed members. The rest of the week has only three monthly economic reports set for release, with only one of them considered to be of high importance. In addition to that data, there are also a batch of congressional appearances from Fed Chairman Powell along with other Fed member speaking engagements and a couple of Treasury auctions midweek. We have the making for a very interesting week for the markets and mortgage rates.



Existing Home Sales from National Assoc of Realtors

Activities start late tomorrow morning when August's Existing Home Sales report is posted at 10:00 AM ET. The National Association of Realtors is expected to announce that the number of home resales in the U.S. rose moderately last month, indicating growth in the housing sector. A strengthening housing sector makes broader economic growth more possible, making bonds less appealing to investors. Therefore, bond traders would prefer to see a decline in sales. Since this report carries only a medium level of importance, it will take a noticeable variance from forecasts for it to directly influence rates.



Fed Talk

Also tomorrow is the first of three consecutive days that Fed Chairman Powell will testify before congress. He and Treasury Secretary Mnuchin will speak before the House Financial Services Committee at 10:30 AM ET tomorrow as part of the Coronavirus Aid Act. The markets listen carefully anytime the Fed Chairman speaks publicly, especially during congressional testimony. This event has the potential to be a market-mover, causing noticeable volatility in the financial and mortgage markets. He often releases his prepared statement before actually speaking, meaning we could see a market reaction earlier than 10:00 AM ET. This process will repeat itself Thursday morning when they appear before the Senate Banking Committee.




Overall, the most important day for the markets and mortgage rates appears to be tomorrow due to the first day of congressional testimony, but today is turning out to be pretty active also. We could also see noticeable movement Thursday too, but the truth is any day this week may yield a change in rates. Some of this week’s events are considered to be highly important to the markets. Accordingly, it would be prudent to watch the markets if closing in the near future and still floating an interest rate.

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.