Rate Lock Advisory

Sunday, August 19th

This week brings us the release of only three pieces of economic data that may influence mortgage rates in addition to the minutes from the last FOMC meeting and the annual Jackson Hole Fed conference. There is nothing of importance set for tomorrow or Tuesday, but there is at least one event or report scheduled every other day of the week. Only one of the reports can be considered very important. As a result, it is likely that we will see the most movement in rates later in the week.

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Bonds


Market Closed

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Dow


Market Closed

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NASDAQ


Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Unknown


Existing Home Sales from National Assoc of Realtors

Starting this week’s calendar is July's Existing Home Sales report late Wednesday morning. The National Association of Realtors will release this report, giving us a measurement of housing sector strength. It covers a high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show a slight rise from June's sales, meaning the housing sector strengthened a little last month. This would generally be bad news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. But unless the increase is much larger than current forecasts, the report will likely have a minimal impact on Wednesday's mortgage pricing.

Medium


Unknown


Federal Open Market Committee (FOMC) Minutes

A second release Wednesday will come during afternoon hours. That is when we will get the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed's plans for raising short-term interest rates. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor. Therefore, be prepared for a move, but not surprised if the impact on rates is minimal.

Low


Unknown


New Home Sales

July's New Home Sales data is next, coming Thursday morning at 10:00 AM ET. This report will give us another indication of housing sector strength and mortgage credit demand, but tracks only a small portion of all home sales. The majority of U.S. home sales are covered in the Existing Home Sales report. This data usually doesn't have much of an impact on bond prices or mortgage rates. Current forecasts are calling for a rise in sales of newly constructed homes from June to July. A large increase in sales would indicate housing sector strength, making the data negative for mortgage rates.

High


Unknown


Durable Goods Orders

July's Durable Goods Orders will be released by the Commerce Department early Friday morning, giving us an important indication of manufacturing sector strength. This report tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as appliances, electronics and airplanes. Analysts are expecting to see a drop of 0.6% in new orders, pointing towards manufacturing sector weakness. This data is known to be quite volatile from month to month, so a decline of this size doesn't raise too much concern about the economy. However, a much larger decline is good news for the bond market and mortgage rates as it means manufacturing activity is softer than many had thought. A secondary reading the excludes more volatile transportation-related orders is expected to rise 0.4%. The softer the reading, the better the news it is for the bond and mortgage markets.

High


Unknown


Misc Fed

Also worth noting is the annual central banker conference in Jackson Hole, Wyoming. There have been major events to come out of this event in the past while others have been non-factors. Federal Reserve Chair Jerome Powell is scheduled to speak at 10:00 AM Friday, which will be watched closely. The conference runs Thursday through Saturday, so we could still see the markets react to something from this event. Any impact on trading or mortgage rates will happen Thursday or Friday.

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Unknown


None

Overall, I am expecting to see the most movement in rates Friday with the week's most important release and a speaking engagement from Fed Chair Powell both scheduled. We need to watch the stock markets for rate direction also as significant selling in them could help bring funds into bonds. Generally speaking, stock strength often hurts the bond market while stock losses make bonds more appealing to investors. Therefore, please proceed cautiously and keep an eye on the markets if still floating an interest rate.

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.