Rate Lock Advisory

Sunday, August 18th

This week brings us the release of only three pieces of economic data that may influence mortgage rates in addition to the minutes from the last FOMC meeting and the annual Jackson Hole Fed conference. There is nothing of importance set for tomorrow or Tuesday, but there is at least one event or report scheduled every other day of the week.

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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

Medium


Unknown


Existing Home Sales from National Assoc of Realtors

Starting this week's calendar is July's Existing Home Sales report late Wednesday morning. The National Association of Realtors will release this report, giving us a measurement of housing sector strength. It covers a high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show a slight rise from June's sales, meaning the housing sector strengthened a little last month. This would generally be bad news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. But unless the increase is much larger than current forecasts, the report will likely have a minimal impact on Wednesday's mortgage pricing.

Medium


Unknown


Federal Open Market Committee (FOMC) Minutes

A second release Wednesday will come during afternoon hours. That is when we will get the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed's potential plans for lowering key short-term interest rates. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor. Therefore, be prepared for a move, but not surprised if the impact on rates is minimal.

Medium


Unknown


Leading Economic Indicators (LEI) from the Conference Board

The Conference Board is a New York-based business research group that will post its Leading Economic Indicators (LEI) for July late Thursday morning. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A higher than expected reading is bad news for the bond market because it would be predicting that the economy may be strengthening more than thought. However, a weaker reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases economic growth concerns in the bond market and could lead to slightly lower mortgage rates Thursday. It is expected to show an increase of 0.2% in the index, indicating moderate economic growth over the next couple of months. It will take a sizable difference between forecasts and its actual reading for this report to noticeably influence mortgage rates.

Low


Unknown


New Home Sales

July's New Home Sales data is set for release Friday morning at 10:00 AM ET. This report will give us another indication of housing sector strength and mortgage credit demand but tracks only a small portion of all home sales. The majority of U.S. home sales are covered in the Existing Home Sales report. This data usually doesn't have much of an impact on bond prices or mortgage rates. Current forecasts are calling for little change in sales of newly constructed homes June and July. A large increase in sales would indicate housing sector strength, making the data negative for mortgage rates.

Medium


Unknown


Fed Talk

Also worth noting is the annual central banker conference in Jackson Hole, Wyoming. There have been major events to come out of this event in the past while others have been non-factors. Federal Reserve Chair Jerome Powell is scheduled to speak at 10:00 AM Friday, which will be watched very closely. The conference runs Thursday through Saturday, so we could still see the markets react to something from this event. The best chance of seeing a reaction is Friday morning.

High


Unknown


Geopolitical/Financial Issues

We also need to watch foreign economic releases as concerns about the global economy are growing stronger. Because there is no major economic data being released this week, attention will be focused on stocks, trade news and possibly data from overseas.

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Unknown


None

Overall, Wednesday or Friday are the best candidates for most active day for rates while Tuesday could be the calmest day. That said, any day can be become quite volatile if unexpected geopolitical or financial news is announced. Therefore, please proceed cautiously if still floating an interest rate and closing in the near future.

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.


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