Rate Lock Advisory

Wednesday, May 23th

Wednesday’s bond market has opened in positive territory despite a lack of important economic news. The major stock indexes are in negative ground with the Dow lower by 43 points and the Nasdaq down 3 points. The bond market is currently up 10/32 (3.02%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.



30 yr - 3.02%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



New Home Sales

Today’s only relevant economic data was April's New Home Sales report at 10:00 AM ET. It showed a 1.5% decline in sales of newly constructed homes. That was a smaller decline percentage than was expected, but a downward revision to March’s sales skewed that figure. The number of sales is lower than what analysts had forecasted, making the data favorable for bonds and mortgage rates. However, this is not the cause for this morning’s bond gains. This report is considered to be minor and bonds were already showing gains during overnight trading.



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

We also have two afternoon events to watch today. First up is the 5-year Treasury Note auction. These types of sales usually do not directly impact mortgage pricing, but they can influence general bond market sentiment. If the sale goes poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors, bringing more funds into bonds. The buying of bonds that follows often translates into lower mortgage rates. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon hours. We will repeat this scenario tomorrow when 7-year Notes are sold.



Federal Open Market Committee (FOMC) Minutes

The other is the minutes of the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns or economic growth. The goal is to form opinions about the Fed's next move regarding interest rates, which is expected to come at next month’s meeting. 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.



Existing Home Sales from National Assoc of Realtors

Besides the 7-year Note auction and weekly unemployment figures, we also have another housing report set for release tomorrow. The National Association of Realtors will give us their Existing Home Sales report at 10:00 AM ET. As with its sister report (today’s New Home Sales), this data will also give us a measurement of housing sector strength demand but tracks resales of existing homes in the U.S. This type of data is relevant because a weakening housing sector makes broader economic growth less likely. Current forecasts are calling for a decline in home sales between March and April. Ideally, the bond market would prefer to see a large decline, indicating housing sector weakness. A large increase in sales could lead to bond weakness and a slight increase in mortgage rates tomorrow morning since a strengthening housing sector raises optimism about general economic growth.

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.