Rate Lock Advisory

Tuesday, July 16th

Tuesday’s bond market has opened in positive territory despite unfavorable results from this morning’s major economic report. Stocks are mixed with the Dow jumping 499 points and the Nasdaq down 63 points. The bond market is currently up 7/32 (4.20%), but weakness late yesterday is going to cause this morning’s mortgage rates to be approximately .125 of a discount point higher than Monday’s early pricing.



30 yr - 4.20%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Retail Sales

This morning brought us the week’s most important economic data with the release of June’s Retail Sales report at 8:30 AM ET. It revealed consumers spent more than thought over the past two months. The headline sales number came in unchanged from May’s level when it was expected to have shown a decline. A secondary reading that excludes more volatile and costly auto transactions rose 0.4%, exceeding forecasts of up 0.1%. Furthermore, upward revisions to all of the recognized readings for May translates into stronger consumer spending. This is bad news for bonds and mortgage rates because this category makes up around 70% of the U.S. economy. As a sign of economic strength, bonds are having a negative reaction to the news.



Housing Starts (New Home Construction)

Tomorrow has several items listed that have the potential to influence mortgage rates, beginning with June's Housing Starts report at 8:30 AM ET. It will give us an indication of strength in the new home portion of the housing sector and future mortgage credit demand. However, it usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. This month's release is expected to show a small increase in new home groundbreakings. The lower the number of starts, the better the news for the bond market and mortgage pricing.



Industrial Production

June's Industrial Production data will be announced at 9:15 AM ET tomorrow. It measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. Analysts are expecting to see an increase of 0.2% from May's production, signaling the manufacturing sector was modestly stronger last month. This report is far from the most important manufacturing report we get each month, especially when the day has other events scheduled. Good news for rates would be a decline.



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

One of tomorrow’s afternoon events is the 20-year Treasury Bond auction results at 1:00 PM ET. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates during afternoon trading. On the other hand, if investor interest in the sale was lackluster, we could see bonds weaken and mortgage rates move higher before the end of the day.



Fed Beige Book

The Federal Reserve's Beige Book report is also set for release tomorrow, but at 2:00 PM ET. This report is named simply after the color of its cover but is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by Fed region throughout the U.S. via the eyes of their business contacts. If there are any significant changes in conditions since the last update, we could see an afternoon move in the markets and mortgage rates tomorrow. Signs of slowing economic activity or weakening inflation would be favorable news for rates.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.