Rate Lock Advisory

Sunday, March 22th

This week brings us the release of only one monthly and one quarterly economic report for the markets to digest and both are just revisions to previously posted data. None of this week’s scheduled events are expected to cause a move in mortgage pricing, leaving Iran and related news to drive bond trading. Weekend headlines between Iran and President Trump threatening to hit infrastructure has taken concerns about energy prices (and resulting inflation) to a new level. This is not favorable news for the bond market that had a near meltdown Friday afternoon. It is hard to imagine that we can recover any of the increase in rates we saw Friday unless something major happens overnight. In other words, we are expecting to see rates move higher tomorrow morning.

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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

Productivity and Costs (Quarterly)

We will get the revised Productivity Index for the 4th Quarter of last year at 8:30 AM ET Tuesday morning. Analysts are expecting to see an increase of 2.7% in productivity, slightly lower than the initial estimate of 2.8%. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can grow without inflation concerns. This release also includes a labor costs reading that can be quite influential if it shows a surprise. However, since this data is quite aged now, it is unlikely to have a noticeable impact on mortgage rates unless it shows a significant change.

Low

Unknown

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

The two Treasury auctions that have the best chance to affect rates this week are set for Wednesday and Thursday. 5-year Notes will be sold Wednesday while 7-year Notes will go Thursday. Neither will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly with weak demand from investors, we could see selling in the broader bond market that leads to a slight upward afternoon revision in mortgage rates. However, strong sales usually make bonds more attractive to investors that translates into an improvement in pricing. Results will be posted at 1:00 PM ET each auction day, so look for any reaction to come during early afternoon hours Wednesday and/or Thursday. It is worth noting that this week’s auctions are for shorter-term debt, which is not nearly as influential as the other sales we follow because mortgage rates are based on long-term securities.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

The week's monthly release will come from the University of Michigan at 10:00 AM ET Friday. Their revised March Consumer Sentiment Index will give us an indication of consumer confidence in their own financial situations. Declining confidence is considered good news for the bond market and mortgage pricing because consumers are likely to spend less when concerned about their finances, helping to restrict economic growth. Friday's report is expected to show a reading of 55.5, unchanged from the preliminary estimate posted two weeks ago. Favorable results for bonds and mortgage rates would be a sizable decline in confidence.

Medium

Unknown

Fed Talk

We also have a large number of Fed member speaking engagements to watch this week. Now that the FOMC meeting is behind us, the mandatory quiet period for its members has expired, allowing for individual thoughts to be heard about the Iran war, the economy, inflation and potential rate cuts. They are spread throughout the week and will continue to be over the next several weeks. Many of these speeches will be uneventful with mundane topics listed, but traders will be listening for any surprise tidbits of information. They take place any time from early morning to evening hours, so they can come into play at any time. There are three that stand out above the rest in terms of most likely to affect rates, scheduled Tuesday and Thursday evenings.

High

Unknown

Geopolitical/Financial Issues

Overall, no day stands out as a clear candidate for most important for rates due to the lack of influential data and other events. The same can be said for calmest day also. Bond trading and mortgage rates will probably be driven mostly by Iran-related headlines. Signs that the Strait of Hormuz may reopen soon would be great news for bonds and should lead to a bond rally, pushing mortgage rates noticeably lower. However, if the attacks back and forth escalate with no sign of ships resuming travel through that area, we could see oil prices and mortgage rates move higher again for the week. With so much uncertainty ahead of us, it would be prudent to keep a close eye on the markets if still floating an interest rate.

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.