Rate Lock Advisory

Thursday, March 28th

Thursday’s bond market has opened in negative territory following unfavorable economic headlines. Stocks are showing minor losses of 10 points in the Dow and 17 points in the Nasdaq. The bond market is currently down 3/32 (4.19%), but strength late yesterday should keep this morning’s mortgage rates close to Wednesday’s early pricing. If you saw an intraday improvement in rates late yesterday, you likely will see an increase of the same size this morning.

3/32


Bonds


30 yr - 4.19%

10


Dow


39,747

17


NASDAQ


16,382

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low


Positive


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

Yesterday’s 7-year Treasury Note auction did not go as well as Tuesday’s 5-year Note sale but did draw an investor interest that the benchmarks indicate was slightly above average compared to other recent sales. Bonds did improve enough after morning rates were posted that a decent number of lenders issued an intraday improvement to pricing. However, the bond rally started long before the auction results were announced at 1:00 PM ET, meaning the auction was not the cause of it.

Low


Negative


GDP Rev 2 (month after Rev 1)

Starting this morning’s batch of economic data was the second revision to the 4th Quarter Gross Domestic Product (GDP) reading at 8:30 AM ET. It showed the U.S. economy actually expanded at a 3.4% annual pace during the last three months of the year, up from the previously estimated 3.2%. By theory, a stronger economy makes bonds less appealing to investors and leads to higher mortgage rates. Realistically though, this data is quite aged at this point and we will get the current quarter’s initial reading next month. This has prevented a stronger reaction to the data than what we have seen so far.

Medium


Neutral


Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update was also posted early this morning, revealing 210,000 new claims for benefits were made. The previous week’s total was revised from 210,000 to 212,000, indicating a week-over-week decline in initial filings. Because this is just a weekly snapshot of part of the employment sector and the variance from forecasts was minor, we are labeling the report neutral-to-slightly negative for rates.

Medium


Negative


Univ of Mich Consumer Sentiment (Rev)

We also got March’s revised Index of Consumer Sentiment from the University of Michigan this morning. They announced a reading of 79.4 that is noticeably higher than the 76.5 that was predicted. The increase from February is a sign that consumers are feeling better about their financial and employment situations. This is bad news for bonds and mortgage rates because a higher level of confidence usually translates into stronger consumer spending numbers, boosting economic activity.

Low


Unknown


Holiday Schedule

The bond market will close at 2:00 PM ET today and remain closed until Monday morning. Stocks will trade a full day today but will also be closed tomorrow for the Good Friday holiday. It is somewhat common to see some weakness in bonds before the early close as traders look to protect themselves from news headlines over the extended weekend. This raises the possibility of seeing a minor increase in rates before the end of the shortened day.

High


Unknown


Personal Income and Outlays

We will be getting a very important inflation reading tomorrow morning despite the markets being closed. February's Personal Income and Outlays report is set to be posted at 8:30 AM ET tomorrow. This data helps us measure consumer ability to spend and current spending habits. If income is rising, consumers are more likely to make additional purchases in the near future, further fueling economic growth. Therefore, weaker than expected readings would be good news for bonds and mortgage rates. Also in this release is an important inflation index (PCE) that the Fed uses to gauge inflationary pressures. It is the PCE that has the potential to be a market-mover, but we won’t see a reaction until Monday morning. Forecasts are currently calling for a 0.4% rise in February's income and the same in spending. Forecasts show the core PCE index rising 0.3%. The weaker the readings, the better the news for mortgage rates.

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.


MAE Capital Real Estate and Loan

CA DRE #01913783|NMLS #806170

4940 Pacific Street Suite A
Rocklin, CA 95677