Rate Lock Advisory

Monday, February 26th

Monday’s bond market has opened in negative territory as traders prepare for this week’s activities. Stocks are showing gains of 88 points in the Dow and 9 points in the Nasdaq. The bond market is currently down 4/32 (4.26%), but strength late Friday should allow this morning’s mortgage rates to be slightly lower than Friday’s early pricing. If you saw an intraday improvement as the week came to a close, you may see a small increase this morning.



30 yr - 4.26%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



New Home Sales

January's New Home Sales report was posted at 10:00 AM ET this morning, revealing a 1.5% rise in sales of newly constructed homes. This was a smaller increase than was expected, but does show a bit of strength in the new home portion of the housing market. Fortunately, last week’s Existing Home Sales report covers most of the home sales in the U.S., leaving this version to cover a small percentage. Accordingly, we can label the report neutral to slightly favorable for mortgage rates.



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

We also have a 5-year Treasury Note auction taking place today. If it draws a lackluster interest from investors, we could see pressure in bonds later today that may lead to a slight upward revision to mortgage pricing. Strong sales usually make bonds more attractive to investors, often translating into lower mortgage rates. Results will be posted at 1:00 PM ET, meaning if there is a reaction to the results announcement, it will come during early afternoon trading. This process will be repeated tomorrow when 7-year Notes are sold.




The rest of the week has six more monthly or quarterly economic reports that we will be watching. There is at least a single item scheduled each day with most days having multiple events listed. As the week progresses, the economic reports gain importance and the movement in mortgage rates should grow stronger.



Durable Goods Orders

Tomorrow has two economic reports set for release, starting with January's Durable Goods Orders at 8:30 AM ET. It is an important measurement of manufacturing sector strength that tracks orders at U.S. factories for items expected to last three or more years. Products such as electronics, refrigerators, airplanes and autos are examples of these big-ticket items. Analysts are expecting to see a 4.4% drop in new orders, hinting at manufacturing sector weakness. It is worth noting that this data is known to be quite volatile from month to month, so large swings are common and won't have as much of an impact as it would in many other reports.



Consumer Confidence Index

February's Consumer Confidence Index (CCI) is next, set for 10:00 AM ET tomorrow. The Conference Board will release this index that measures consumer confidence in their personal financial situations. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, related data is considered important in terms of gauging economic growth. It is expected to show a slightly lower reading than January's 114.8. A lower reading than 114.6 would be considered good news for bonds and mortgage rates as it would indicate consumers are less likely to make a large purchase in the near future than many had thought.




Overall, Thursday or Friday look to be the most important days for rates. The markets will be focused on Thursday’s PCE inflation reading and the ISM index always draws plenty of attention. If still floating an interest rate and closing in the near future, it would be prudent to keep an eye on the markets since rates should be active this week.

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.

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