Rate Lock Advisory

Tuesday, September 27th

Tuesday’s bond market has opened in positive territory despite stronger than expected economic news. The stock markets are showing noticeable gains with the Dow up 84 points and the Nasdaq up 33 points. The bond market is currently up 5/32 (1.56%), which should improve this morning’s mortgage rates slightly if comparing to Monday’s morning pricing.

5/32


Bonds


30 yr - 1.56%

84


Dow


18,179

33


NASDAQ


5,291

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Negative


Consumer Confidence Index (Conference Board)

The Conference Board gave us today’s only relevant economic data with the release of September's Consumer Confidence Index (CCI) at 10:00 AM ET this morning. They announced a reading of 104.1 that was well above forecasts of 98.8. Analysts were calling for a small decline in confidence from August’s level, not an increase. This means surveyed consumers were much more optimistic about their own financial situations than many had thought, making the data bad news for bonds and mortgage rates. That is because rising confidence usually translates into stronger levels of consumer spending, fueling economic growth. Fortunately for mortgage shoppers, this is not considered to be a key piece of data.

Medium


Unknown


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

There is also the 5-year Treasury Note auction taking place today that may slightly influence mortgage rates. The Treasury will sell 5-year Notes today and 7-year Notes tomorrow. These sales will tell us if there is an appetite in the markets for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET, so if there is a reaction, it will come during early afternoon trading.

High


Unknown


Durable Goods Orders

Besides the 7-year Note auction tomorrow, we also have August's Durable Goods Orders to deal with. This 8:30 AM ET release will give us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Big-ticket products are items that are expected to last three or more years such as appliances, airplanes and electronics. Analysts are expecting to see a decline in new orders, indicating weakness in the manufacturing sector. A larger decline than the 1.9% that is being forecasted should help boost bond prices and cause mortgage rates to drop tomorrow morning because signs of economic weakness make longer-term securities more appealing to investors. However, an increase in new orders would indicate a stronger than expected manufacturing sector that would likely help push mortgage rates higher. It is worth noting that this data is known to be quite volatile from month-to-month, so a slight or moderate variance may not affect mortgage pricing.

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.