Rate Lock Advisory

Tuesday, January 23th

Tuesday’s bond market has opened in positive territory even though we have nothing scheduled today that is relevant. The major stock indexes are mixed with the Dow down 6 points and the Nasdaq up 30 points. The bond market is currently up 10/32 (2.62%), but weakness late yesterday will limit this morning’s improvement in mortgage rates to slightly less than .125 or a discount point.

10/32


Bonds


30 yr - 2.62%

6


Dow


26,208

30


NASDAQ


7,438

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Positive


Geopolitical/Financial Issues

Now that the shutdown has ended, at least for the next several weeks, we can turn our attention towards this week’s economic calendar. This morning’s bond improvement isn’t a result of the government shutdown ending or any economic data released today. The single biggest reason we are seeing a positive move in bonds this morning is news from Japan’s central bank that their bond buying program is indeed remaining in place. Comments made recently about a drop in the amount of bonds the Bank of Japan had purchased led some to speculate that they would be winding down their economic stimulus program soon. That would be an indication of expected strength in Japan’s economy. Today’s comments put an end to that rumor and U.S. securities are responding favorably.

Medium


Unknown


Existing Home Sales from National Assoc of Realtors

Starting the week's calendar will be December's Existing Home Sales from the National Association of Realtors late tomorrow morning. This data will give us a measurement of housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show a decline in sales from November's level, meaning the housing sector softened last month. Ideally, bond traders would like to see a large decline in sales that would point toward sector weakness because weaker housing makes broader economic growth more difficult. However, as long we don't see a significant surprise in its results, it shouldn't have a noticeable impact on tomorrow mortgage rates.

Medium


Unknown


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

Tomorrow also brings us the first of this week's two relatively important Treasury auctions. The Treasury will auction 5-year Notes tomorrow and 7-year Notes Thursday. If these sales are met with a strong demand from investors, the broader bond market may improve during afternoon hours. If they draw a lackluster interest, they could lead to bond selling and higher mortgage rates tomorrow and/or Thursday afternoon. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

High


Unknown


Gross Domestic Product (GDP)

We do have two important economic releases set for Friday- December’s Durable Goods Orders and the initial 4th quarter Gross Domestic Product (GDP) reading. Both can have a noticeable impact on the financial markets and mortgage rates. They would have been affected by the government shutdown, but now should be released as scheduled.

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.