Rate Lock Advisory

Wednesday, September 20th

Wednesday’s bond market has opened in positive territory following favorable economic data and a calm open in stocks. The major stock indexes are fairly flat with the Dow down 4 points and the Nasdaq down 3 points. The bond market is currently up 4/32 (2.23%), but slight weakness late yesterday should keep this morning’s mortgage rates at Tuesday’s early pricing.

4/32


Bonds


30 yr - 2.23%

4


Dow


22,365

3


NASDAQ


6,457

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Neutral


Existing Home Sales from National Assoc of Realtors

August's Existing Home Sales was posted at 10:00 AM ET. The National Association of Realtors announced a 1.7% decline in home resales last month. This was weaker than expected, hinting at a softening housing sector. However, the decline is being attributed to a 25% drop in Houston area sales, related to Hurricane Harvey. Therefore, not much weight is being given to the data this morning. Traders are more interested in this afternoon’s events.

High


Unknown


Federal Open Market Committee (FOMC) Statement

Those afternoon activities start at 2:00 PM ET with the FOMC meeting adjournment that probably will not yield an increase in key short-term interest rates. There is a small chance of the Fed raising rates at this meeting but the consensus is that they will not. What will be of interest is verbiage in the post-meeting statement that may indicate when the Fed will make their next move, which has long expected to be before the end of the year. Analysts and traders will also be looking for changes to the Fed’s massive balance sheet. Rapid selling of holdings is bad for bonds and mortgage rates.

Medium


Unknown


Misc Fed

Also at 2:00 PM ET, the Fed will release their revised economic projections for the U.S. The markets are interested in whether Janet Yellen and friends think economic conditions will be stronger or weaker in the coming months and years than previously thought. Key readings the markets will be looking for are the unemployment rate, inflation and overall GDP growth. Downward revisions by the Fed will be good news for bonds and mortgage pricing because it would mean another bump to key short-term interest rates before the end of the year may not be a sure thing after all. On the other hand, upward revisions that indicate the economy is likely to support a Fed rate hike could cause bond selling and an increase to mortgage rates.

High


Unknown


Fed Talk

The adjournment, post-meeting statement and economic projections will be followed by a press conference with Fed Chair Yellen at 2:30 PM ET. All Fed meetings are highly important, but this one is particularly significant for the financial and mortgage markets due to the uncertainty of when the Fed will make another monetary policy move and unwind their current holdings. Analysts and market traders will be watching her words carefully for any indication on the likelihood of a rate hike later this year (assuming one was not made at this meeting). Any question or answer at the press conference can impact the markets, so there is a decent chance of seeing quite a bit of volatility this afternoon.

High


Unknown


None

We will update this report shortly after the markets have an opportunity to react to the Fed’s actions and words. There are a couple of minor economic reports set for release tomorrow. They will be addressed in this afternoon’s update.

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.