Rate Lock Advisory

Thursday, May 19th

Thursday’s bond market has opened in positive territory again, extending yesterday’s late rally. Stocks are mixed after yesterday’s significant sell-off that caused the Dow to lose over 1,100 points. It is currently down 296 points while the Nasdaq is up 29 points at the moment. The bond market is up 19/32 (2.81%), which should push this morning’s mortgage rates lower by approximately .500 - .625 of a discount point if compared to Wednesday’s early rates. There were widespread intraday improvements reported during the day yesterday as stocks spiraled lower and bonds rallied. The actual size of this morning’s improvement depends on how much of a revision you saw yesterday afternoon.

19/32

Bonds

30 yr - 2.81%

296

Dow

31,193

29

NASDAQ

11,447

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Neutral

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

Yesterday’s 20-year Treasury Bond auction was mostly uneventful. The benchmarks we use to gauge investor demand showed a slightly better than average interest in the sale compared to recent similar auctions. Bonds responded favorably after results were posted at 1:00 PM ET. However, they were already gaining momentum between morning pricing and the time results were announced. In other words, the sale did nothing to derail the rally but was not the reason for it.

Low

Positive

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures revealed 218,000 new claims for benefits were filed during the week. This was higher than expected and a somewhat noticeable increase from the previous week’s revised 197,000 initial filings. Accordingly, we can consider the numbers to be favorable for bonds and mortgage rates even though they haven’t had a strong impact on this morning’s pricing.

Medium

Positive

Leading Economic Indicators (LEI) from the Conference Board

April's Leading Economic Indicators (LEI) from the Conference Board was one of this morning’s two late releases. It came in with a 0.3% decline compared to the unchanged that analysts were expecting. The decline means the indicators are pointing towards slower economic activity over the next several months. Since bonds tend to thrive in weaker economic conditions, we can label this report as favorable for mortgage rates.

Medium

Positive

Existing Home Sales from National Assoc of Realtors

The week’s final report came from the National Association of Realtors, who said home resales fell 2.4% last month, nearly matching forecasts. Declining sales is good news because a weakening housing sector makes broader economic growth much more difficult.

Medium

Unknown

Stock Influences

There is nothing of importance scheduled for release tomorrow. We can expect stock movement to help drive bond trading and changes to mortgage rates. Generally speaking, stock losses are good news for bonds. As stock selling accelerates, investors tend to move funds into bonds as a safe-haven from the volatility. That causes bond prices to rise and yields to move lower, translating into improvements to mortgage rates. If stocks rebound tomorrow, we could see bonds give back some of today’s gains and mortgage rates to move a little higher.

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.

Mainlands Real Estate, Inc

9185 US Highway 19 N
Pinellas Park, FL 33782-5406
Realtor MLSEqual Housing Opportunity
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