Rate Lock Advisory

Wednesday, July 17th

Wednesday’s bond market has opened in negative territory, erasing yesterday’s late gains. Stocks are well in opposite directions with the Dow up 147 points and the Nasdaq down 428 points. The bond market is currently down 8/32 (4.19%), but late afternoon strength yesterday is going to allow this morning’s rates to appear nearly unchanged. If you saw an intraday improvement Tuesday afternoon, you will likely see an increase this morning of about the same size.



30 yr - 4.19%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Housing Starts (New Home Construction)

The first of today’s four events was the release of June's Housing Starts report at 8:30 AM ET that showed new home construction rose at a 3% rate last month. Analysts were expecting to see a smaller rise in starts. However, the larger increase is being attributed to groundbreakings in multi-family projects such as apartment buildings. New starts on single-family homes, which are more relevant to mortgage rates, actually declined last month. Accordingly, we are labeling the report neutral to slightly negative for rates.



Industrial Production

Next up was June's Industrial Production data at 9:15 AM ET. It revealed a 0.6% jump in output at U.S. factories, mines and utilities. This was stronger than the 0.3% rise that was expected, hinting at manufacturing strength. As a sign of stronger than thought activity that makes bonds less attractive to investors, the report is bad news for mortgage rates.



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

Today’s remaining events will come during afternoon trading. There is a 20-year Treasury Bond auction taking place today. The results of it will be announced at 1:00 PM ET. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates during early afternoon trading. On the other hand, if investor interest in the sale was lackluster, we could see bonds weaken and mortgage rates move higher before the end of the day.



Fed Beige Book

The Federal Reserve's Beige Book report will close today’s activities at 2:00 PM ET. This report is named simply after the color of its cover but is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by Fed region throughout the U.S. via the eyes of their business contacts. If there are any significant changes in conditions since the last update, we could see an afternoon move in the markets and mortgage rates. Signs of slowing economic activity or weakening inflation would be favorable news for rates.



Weekly Unemployment Claims (every Thursday)

Tomorrow has two relatively minor economic releases that may have a modest impact on mortgage pricing. We will get last week’s unemployment figures at 8:30 AM ET. They are expected to indicate more people made new claims for benefits last week than the previous week’s 222,000 initial filings. Rising claims are a sign of weakness in the employment sector, meaning the larger the number tomorrow the better the news for rates.



Leading Economic Indicators (LEI) from the Conference Board

June's Leading Economic Indicators (LEI) at 10:00 AM ET tomorrow is the final report of the week. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. Traders are expecting it to show a 0.3% decline, meaning the indicators are predicting slower economic activity over the next few months. A bigger decline in the index would be good news for the bond and mortgage markets.

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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