Rate Lock Advisory

Thursday, October 17th

Thursday’s bond market has opened well in negative territory following unfavorable results in two of this morning’s economic releases. Stocks are responding to the same data with gains of 93 points in the Dow and 42 points in the Nasdaq. The bond market is currently down 20/32 (4.09%), which should cause an increase of approximately .250 - .375 of a discount point in this morning’s mortgage rates.

20/32

Bonds

30 yr - 4.09%

93

Dow

43,171

42

NASDAQ

18,409

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

Retail Sales

September’s Retail Sales report was this morning’s key economic release. It revealed consumers spent much more last month than many had thought. The 0.4% increase in overall sales was slightly higher than forecasts of 0.3%. However, a secondary reading that excludes more costly and volatile auto transactions rose 0.5%, greatly exceeding expectations of up 0.1%. This is bad news for bonds and mortgage rates because consumer spending drives broader economic growth. That category makes up about 70% of the U.S. economy and mortgage-related bonds tend to become less attractive to investors when the economy is stronger.

Medium

Negative

Weekly Unemployment Claims (every Thursday)

Today’s second 8:30 AM ET economic report was last week’s unemployment update that showed only 241,000 new claims for jobless benefits were made. This was well below predictions of 260,000 and a decline from the previous week’s revised number of 260,000. Declining claims are a sign of strength in the employment sector. Accordingly, this data is good news for stocks and bad news for bonds and mortgage pricing.

Medium

Positive

Industrial Production

We also got a measure of manufacturing activity at 9:15 AM ET. September's Industrial Production data indicated output at U.S. factories, mines and utilities was softer than expected for the past two months. Output fell 0.3% last month while August’s production was changed from up 0.8% to up only 0.3%. Both readings hint that some manufacturing activity is softer than analysts thought. This is good news for the bond market, but it is the least important of the morning’s three releases. The markets are trading on the early morning headlines instead of this data.

Low

Unknown

Housing Starts (New Home Construction)

Tomorrow has just one minor economic report scheduled. The Commerce Department will post September’s Housing Starts report at 8:30 AM ET. This data will probably not have a heavy impact on the bond market or mortgage rates. It gives us a sign of housing sector strength and future mortgage credit demand by tracking new home groundbreakings. However, it is considered to be of low importance to the financial and mortgage markets. Analysts are expecting it to show little change in new home starts between August and September. Due to the lack of market importance, we need to see a significant surprise in this data for it to have a noticeable influence on tomorrow’s mortgage rates.

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.

American Mortgage Services

171 Wesley Reed Drive
Atoka, TN 38004
Equal Housing LenderEqual Housing Opportunity
Company NMLS#: 121655
Jonathan Burnett NMLS#: 2093255
Stacey Walker NMLS#: 1981512
Portions Copyright © 2024 Pipeline ROI, LLC
Another website by Pipeline ROI