Rate Lock Advisory

Sunday, February 25th

This week brings us seven economic reports for the markets to digest in addition to a couple of Treasury auctions. There is something scheduled for each day with most days having multiple events listed that may affect rates. As the week progresses, the economic reports gain importance. This means we should see the strongest moves in mortgage rates the latter days.

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Bonds


Market Closed

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Dow


Market Closed

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NASDAQ


Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low


Unknown


New Home Sales

Unlike many Mondays, tomorrow does have a couple of events scheduled that may have a small impact on rates. January's New Home Sales report will be posted late tomorrow morning. This is the least important piece of data this week and is the sister report to last week's Existing Home Sales data. It also measures housing sector strength and mortgage credit demand but covers such a small part of all home sales. Therefore, it usually does not have a significant impact on bond trading or mortgage rates unless it shows a significant surprise. Tomorrow's report is expected to show an increase in sales of newly constructed homes, hinting at strength in the new home portion of the housing sector. The smaller the number of sales, the better the news for bonds and mortgage rates.

Low


Unknown


New Home Sales

Also tomorrow will be the first of this week's two potentially relevant Treasury auctions. There will be an auction of 5-year Notes tomorrow followed by 7-year Notes Tuesday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, meaning weak investor demand, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors that brings more funds into the bond market. This often translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during early afternoon hours.

High


Unknown


Durable Goods Orders

Tuesday has two economic reports set for release. January's Durable Goods Orders is the first, coming at 8:30 AM ET. It is an important measurement of manufacturing sector strength that tracks orders at U.S. factories for items expected to last three or more years. Products such as electronics, refrigerators, airplanes and autos are examples of these big-ticket items. Analysts are expecting to see a 4.4% drop in new orders, hinting at manufacturing sector weakness. It is worth noting that this data is known to be quite volatile from month to month, so large swings are common and won't have as much of an impact as it would in many other reports.

Medium


Unknown


Consumer Confidence Index

February's Consumer Confidence Index (CCI) is next, set for 10:00 AM ET Tuesday. The Conference Board will release this index that measures consumer confidence in their personal financial situations. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, related data is considered important in terms of gauging economic growth. It is expected to show a slightly lower reading than January's 114.8. A lower reading than 114.6 would be considered good news for bonds and mortgage rates as it would indicate consumers are less likely to make a large purchase in the near future than many had thought.

Medium


Unknown


GDP Rev 1 (month after initial)

Early Wednesday morning is when the first revision to the 4th Quarter Gross Domestic Product (GDP) reading will be announced. The GDP is considered to be the benchmark indicator of economic growth that comes in a preliminary version followed by two revisions one month apart. This is the second version from last quarter and is expected to show the economy grew at a 3.2% annual rate over the last three months of the year, down slightly from the initial estimate of 3.3%. Because bonds are more attractive to investors during times of economic weakness, the bond market and mortgage rates should improve if there is a noticeable downward revision.

High


Unknown


Personal Income and Outlays

January's Personal Income and Outlays report is set for release at 8:30 AM ET Thursday. This data gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for a rise in income of 0.5% while spending is expected to have risen 0.2%. Rising income means consumers have more money to spend. And stronger levels of consumer spending help fuel overall economic growth, making long-term securities such as mortgage-related bonds less attractive to investors. This report also contains a key inflation reading that the Fed relies on during their FOMC meetings. Accordingly, good news for rates would be weaker numbers.

High


Unknown


ISM Index (Institute for Supply Management)

The Institute for Supply Management (ISM) will release their manufacturing index for February at 10:00 AM ET Friday. This index surveys manufacturer sentiment and can have a pretty heavy impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a small rise from January's 49.1. An increase means more surveyed manufacturers felt business improved during the month than did last month. If we see a decline, the bond market should respond favorably since it would be a sign of economic weakness. One of the reasons this data is considered so important is the fact that it is usually the first monthly report posted that covers the preceding month. It is traditionally released on the first business day of the month, allowing for a current snapshot of conditions in the manufacturing sector.

Medium


Unknown


Univ of Mich Consumer Sentiment (Rev)

The University of Michigan's revision to their Index of Consumer Sentiment for February will close out the week's calendar late Friday morning. Forecasts show this index coming in at 79.6, up from the preliminary reading of 78.8 two weeks ago. It is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend, but it is not considered to be a major market mover. A decline would be considered good news for rates.

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Unknown


none

Overall, Thursday or Friday look to be the most important days for rates. The markets will be focused on Thursday’s PCE inflation reading and the ISM index always draws plenty of attention. If still floating an interest rate and closing in the near future, it would be prudent to keep an eye on the markets since rates should be active this week.

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.