Rate Lock Advisory

Wednesday, July 8th

Wednesday’s bond market has opened in negative territory following headlines from the Middle East. Stocks are following suit with losses of 488 points in the Dow and 86 points in the Nasdaq. The bond market is currently down 7/32 (4.57%), which with afternoon losses yesterday should cause an increase in this morning’s mortgage rates of approximately .375 of a discount point. This morning’s increase won’t be as strong if you saw an intraday increase before closing yesterday.

7/32

Bonds

30 yr - 4.57%

488

Dow

52,437

86

NASDAQ

25,732

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

Iran War Headlines

While there isn’t any relevant economic data coming today, Iran-related news is heavily influencing the markets this morning. Military action by the U.S., in response to attacks on shipping in the Strait of Hormuz that was supposed to be open for travel, led Iran to attack other countries in the region in retaliation. This put into question whether the current peace deal could hold. Then President Trump made statements at the Turkey NATO summit that the ceasefire was over, causing oil prices to move noticeably higher. Accordingly, inflation fears as a result of the higher oil costs, especially if the conflict continues and they keep rising, are fueling bond and stock selling this morning.

Medium

Unknown

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

This afternoon’s scheduled events could affect mortgage rates also. There is a 10-year Treasury Note auction happening today with results set to be announced at 1:00 PM ET. Good news for bonds and mortgage pricing will be the benchmarks indicating investor demand for the securities was strong. Mortgage rates are based on long-term debt also, so this sale should have much more of an impact on rates than the shorter-term auctions did two weeks ago. This scenario will be repeated tomorrow when 30-year Bonds are sold.

Medium

Unknown

FOMC Meeting Minutes

We will also get the minutes from the June 16-17 FOMC meeting at 2:00 PM ET today. There is a possibility of the markets reacting to them, but I don't believe they will reveal a significant surprise that we did not get from the post-meeting statement, revised economic projections and press conference last month. Bond traders are looking for feelings about the direction of inflation and individual member thoughts about the Fed's next monetary policy move. There is much debate about whether the Fed will need to raise key short-term interest rates before they lower them again. Any information that helps form a consensus either way will likely draw a reaction in the markets later today.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow has two relatively minor economic releases scheduled. Last week’s unemployment figures will be posted at 8:30 AM ET. They are expected to show 218,000 new claims for jobless benefits were filed last week. This would be an increase from the previous week’s 215,000 new claims. Since rising claims are a sign of weakness in the employment sector, a much larger than predicted number would be favorable for rates.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

Closing out this week’s economic calendar will be June’s Existing Home Sales report at 10:00 AM ET tomorrow. The National Association of Realtors is expected to say home resales rose a little last month, hinting at modest strength in the housing sector. Housing weakness makes broader economic growth more difficult, meaning good news for rates would be a decline in sales rather than an increase. That said, this report rarely causes a significant move in rates because it doesn’t carry a high level of importance in the 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... 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.

Milestone Mortgage, Inc. NMLS#136714

38 W Main Street
Carmel, IN 46032
Equal Housing Lender
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