Rate Lock Advisory

Wednesday, July 26th

WEDNESDAY AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with no change to key short-term interest rates, as was expected. They did address the balance sheet reduction issue by implying that a process to gradually reduce their holdings will start possibly at their next meeting. That is assuming that the economy remains on track.

13/32


Bonds


30 yr - 2.28%

80


Dow


21,696

10


NASDAQ


6,422

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Positive


Federal Open Market Committee (FOMC) Statement

There really were no major surprises this afternoon. The stock markets are currently off their morning highs, but are still showing solid gains for the day with the Dow up 80 points and the Nasdaq up 10 points. Bonds have made more of a move this afternoon, currently up 13/32 (2.28%). This is enough of a change for mortgage rates to improve approximately .125 of a discount point from this morning’s pricing.

Medium


Neutral


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

Today’s 5-year Treasury Note auction went very well with indicators pointing towards a strong interest in the securities. The FOMC meeting drew more attention in the bond market than this auction, so we did not see much of a reaction to the results. Although, it does allow us to remain optimistic about tomorrow’s 7-year Note sale that has the potential to affect afternoon rates.

Low


Neutral


New Home Sales

The only relevant economic data posted this morning was June’s New Home Sales report at 10:00 AM ET this morning. The Commerce Department announced that sales of newly constructed homes rose 0.8% last month. The percentage increase indicates stronger than expected sales since analysts were calling for no change from May’s level. However, the number of sales matched forecasts. A downward revision to May’s sales created the percentage increase, making the news neutral for bonds and mortgage rates.

High


Unknown


Durable Goods Orders

Tomorrow morning has two pieces of economic data being posted at 8:30 AM ET. The more important of the two will be June's Durable Goods Orders from the Commerce Department. Current forecasts are calling for an increase in new orders of 2.9% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. A much stronger than expected rise may lead to higher mortgage rates tomorrow morning because it would point towards economic strength. If it reveals a large decline in new orders, mortgage rates should move lower. It should be noted though that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move the markets or mortgage rates.

Low


Unknown


Weekly Unemployment Claims (every Thursday)

The second release of the morning will be last week's unemployment figures. They are forecasted to show that 240,000 new claims for unemployment benefits were filed last week, up from the previous week’s 233,000 initial claims. This report usually doesn't cause much movement in the markets or mortgage rates unless it shows a significant jump or drop in initial claims for benefits. The higher the number of claims, the better the news it is for bonds and mortgage rates since rising claims is a sign of employment sector weakness.

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... Lock 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.