Rate Lock Advisory

Thursday, February 27th

Thursday’s bond market has opened up sharply with stocks in selling mode again. The Dow is currently down 605 points while the Nasdaq is down 244 points. The bond market is currently up 23/32 (1.26%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.



30 yr - 1.26%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



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

Yesterday afternoon's 5-year Treasury Note auction was uneventful for the most part. The indicators we use to gauge investor demand showed an average level of interest. Bonds had little reaction to the news and did not impact mortgage rates. It also leaves us little to be optimistic about in today’s 7-year Note auction. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading. A strong demand from investors is good news for the broader bond market.



Durable Goods Orders

January's Durable Goods Orders data was posted at 8:30 AM ET, revealing a 0.2% decline in new orders for big-ticket products. This was a small decline than was expected (1.2%), meaning overall orders were stronger than thought. Even a secondary reading that excludes more volatile transportation orders, such as new airplanes, came in stronger than forecasts. The data is considered to be important and the stronger readings are negative for bonds and mortgage rates. Fortunately, the coronavirus is taking centerstage again, making the data irrelevant at the moment.



GDP Rev 1 (month after initial)

The first revision to the 4th Quarter Gross Domestic Product (GDP) reading was also posted early this morning. It showed that the economy grew at an annual rate of 2.1%, matching the previous estimate. The data is a little aged now covering October through December of last year. Accordingly, the unchanged reading has failed to move the markets.



Geopolitical/Financial Issues

What is driving today’s trading is renewed concerns about the coronavirus spreading further and its impact on the global economy. That caused stocks to take another nosedive, leading to funds shifting into bonds as a safe haven. The result is a new record low for the benchmark 10-year Treasury Note yield. Mortgage rates haven’t moved as much, but continue their downward move for the time being.



Personal Income and Outlays

Tomorrow has the final two relevant economic reports, starting with January’s Personal Income and Outlays report at 8:30 AM ET. This data gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.4% while spending is expected to have risen 0.3%. Lower levels of income mean consumers have less money to spend. And weaker levels of consumer spending help limit overall economic growth, making long-term securities such as mortgage-related bonds more attractive to investors. It also contains a key inflation reading that the Fed relies on during their FOMC meetings. Therefore, the weaker the readings, the better the news it would be for mortgage rates.



University of Michigan Consumer Sentiment (Rev)

The University of Michigan's revision to their Index of Consumer Sentiment for February will close out the week's calendar at 10:00 AM ET tomorrow morning. Forecasts show this index nearly unchanged from its preliminary estimate of 100.9 that was posted two weeks ago. It is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend but is not considered to be a major market mover.

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.