Rate Lock Advisory

Wednesday, September 28th

Wednesday’s bond market has opened well in positive territory following news from overseas. Stocks are showing gains also, pushing the Dow up 184 points and the Nasdaq up 30 points. The bond market is currently up 25/32 (3.84%), which should improve this morning’s mortgage rates by approximately .625 - .750 of a discount point if compared to Tuesday’s early pricing. There were widespread rate revisions throughout the day yesterday, so the actual size of this morning’s improvement depends on the changes you saw before closing yesterday.

25/32


Bonds


30 yr - 3.84%

184


Dow


29,319

30


NASDAQ


10,860

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Unknown


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

Yesterday’s 5-year Treasury Note auction did not go well. The benchmarks we use to gauge investor demand in the sale showed a below average interest compared to other recent auctions. Bonds reacted negatively as soon as results were announced at 1:00 PM ET but recovered that move before the end of the day. Those results prevent us from being optimistic about today’s 7-year Note sale. If the 1:00 PM ET results show a much stronger demand than yesterday, we could see bonds improve slightly during early afternoon trading.

Medium


Unknown


Fed Talk

There is nothing scheduled for today in terms of relevant economic data. We do have a few Fed speaking engagements taking place that may have an impact on the markets if there are any surprises in them. We have a total of five of them scheduled for today alone with the last set for 2:00 PM ET.

High


Positive


Geopolitical/Financial Issues

This morning’s favorable open in bonds is a result of announcement from the Bank of England (BOE) that they are prepared to purchase an unlimited amount of bonds to stabilize their markets until October 14th. Their bond market losses spiraled significantly since the government’s new fiscal plan to make large tax cuts and sell a huge amount of bonds to offset those cuts was made public this past weekend. That led to a bond sell-off on a global scale, including here in the U.S. Our benchmark 10-year Treasury Note yield broke above 4.00% for the first time since April 2010 during overnight trading. Once news hit that the BOE was stepping in to support their markets, our bonds rebounded also, leading to this morning’s gains. The move from the BOE didn’t come as a surprise though. It was just a matter of when they would step in to help.

Low


Unknown


GDP Rev 2 (month after Rev 1)

Tomorrow’s calendar includes the second revision to the 2nd Quarter Gross Domestic Product (GDP) and weekly unemployment figures at 8:30 AM ET. Since the GDP data is aged now and the preliminary reading of the 3rd quarter will be released next month, I don't see this update having much of an impact on the financial markets or mortgage pricing. The GDP is important because it is the total sum of all goods and services produced in the U.S. and is considered to be the best gauge of economic activity. Tomorrow's update is expected to show that the economy contracted at an annual rate of 0.6%, unchanged from last month's estimate. A significant downward revision would be considered favorable news for rates.

Medium


Unknown


Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures are expected to show 213,000 new claims for benefits were filed, matching the previous week’s number. Rising claims is a sign of employment sector strength, meaning the higher the number of initial filings, the better the news it is for rates. However, because this is just a weekly snapshot of the sector, it will take a wide variance from forecasts for the data to directly influence mortgage pricing.

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.


The ProTon Group, Inc.

119 Jadestone
Irvine, California 92603