Rate Lock Advisory

Tuesday, September 16th

Tuesday’s bond market has opened in positive territory even though both of this morning’s economic releases were not bond friendly. Stocks may be boosting bonds with losses of 187 points in the Dow and 15 points in the Nasdaq. The bond market is currently up 3/32 (4.03%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

3/32

Bonds

30 yr - 4.03%

187

Dow

45,695

15

NASDAQ

22,333

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

Retail Sales

August’s Retail Sales report that was posted early this morning revealed consumers spent more last month than many had thought. Overall sales rose 0.6% when forecasts had them up 0.3%. A secondary reading that excludes more costly and volatile auto sales came in up 0.7%, exceeding expectations of up 0.4%. These readings indicate consumers are continuing to spend despite rising costs and employment concerns. They signal economic strength that make them bad news for bonds and mortgage rates, but likely won’t have an impact on what the Fed decides to do tomorrow.

Low

Negative

Industrial Production

Also posted this morning was August’s Industrial Production report. It showed output at U.S. factories, mines and utilities rose 0.1% last month, slightly stronger than the unchanged that was expected. Because this report is only moderately important and varied slightly from expectations, it has had no impact on this morning’s rates despite being labeled unfavorable for bonds.

Medium

Unknown

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

Results of today’s 20-year Treasury Bond auction will be announced at 1:00 PM ET, giving us an indication of investor appetite for longer-term securities. If demand from investors is strong, we may see bonds improve shortly after results are made available. This could lead to a slight improvement in this afternoon’s mortgage pricing. However, a soft auction could cause a minor upward revision to rates before the end of the day.

Low

Unknown

Housing Starts (New Home Construction)

Tomorrow's activities will begin with August's Housing Starts report at 8:30 AM ET. This report will probably not have a heavy impact on the bond market or mortgage rates. It helps us measure housing sector strength and future mortgage credit demand by tracking new home groundbreakings. However, this report is usually considered to be of low importance and often has just a minimal impact on rates. It is expected to show new home groundbreakings declined from July, pointing to a bit of weakness in the new home portion of the housing sector. We need to see a significant surprise in this data for it to have a noticeable influence on mortgage rates, especially on a day that it precedes an FOMC meeting.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Tomorrow afternoon brings us the FOMC meeting adjournment and other related events. The meeting is widely expected to yield a Fed rate cut to help boost the weakening employment sector. This would be the first such move since December, which was the final of three consecutive rate cuts late last year. While the general consensus is a quarter-point cut at this meeting followed by similar moves during at least one of the October and/or December meetings left in the year, some are predicting a half-point at this time.

High

Unknown

Misc Fed

The meeting will adjourn at 2:00 PM ET tomorrow, the same time the post-meeting statement and revised economic projections are released. Those economic projections also include the Fed’s so-called Dot Plot that tells us where individual Fed members think these short-term rates will be in the future. This is another way the Fed is telling us how they think will happen to key rates in the 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.

Rose Tignor

Loan Officer NMLS #166872
Company NMLS #249899

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971 Benders Ferry Rd
Mt. Juliet, TN 37122
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