Rate Lock Advisory

Friday, January 18th

Friday’s bond market has opened in negative territory again despite favorable economic news. Stocks are contributing to this morning’s weakness by posting gains of 192 points and 59 points in the Dow and Nasdaq respectively. The bond market is currently down 8/32 (2.77%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

8/32

Bonds

30 yr - 2.77%

192

Dow

24,562

59

NASDAQ

7,143

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

Industrial Production and Capacity Utilization

The first of this morning’s two economic releases was December's Industrial Production report at 9:15 AM ET. It showed a 0.3% rise in output at U.S. factories, mines and utilities, exceeding expectations of a 0.2% increase. The larger increase makes the data negative for bonds and mortgage rates, but it was only a minor variance in a moderately important report. Therefore, it has not had much of an impact on this morning’s bond trading or mortgage pricing.

Medium

Positive

University of Michigan Consumer Sentiment (Prelim)

January's preliminary reading to the University of Michigan's Index of Consumer Sentiment was posted at 10:00 AM ET. This release gave us clearly good news by coming in much lower than expectations. Today’s release revealed a 90.7 reading when analysts were expecting to see 96.5. This was also a sizable decline from November’s 98.3. The lower reading indicates that surveyed consumers were much less optimistic about their own financial situations than last month. That is good news because weaker levels of confidence likely will lead to softer levels of consumer spending that fuels economic growth. Unfortunately, this report does not carry the significance of some of the other reports we regularly get. That is why we have not seen a stronger reaction to the news.

Low

Unknown

None

Next week doesn’t have too much scheduled that is expected to influence mortgage rates. The markets will be closed Monday for the Martin Luther King holiday and the most important report of what was scheduled is likely to fall victim to the government shutdown. The remaining data we will get is moderately important at best. Look for details on next week’s events in Sunday evening’s weekly preview.

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.