Thursday’s bond market has opened in negative territory, extending yesterday’s late selling that continued through overnight trading. Stocks are also in selling mode with the Dow down 139 points and the Nasdaq down 130 points. The bond market is currently down 19/32 (4.47%), which should cause an increase in this morning’s mortgage rates of approximately .750 – .875 of a discount point if compared to Wednesday’s early pricing. Some of that increase probably came in late afternoon upward revisions after the FOMC events. 19/32 Bonds 30 yr - 4.47% 139 Dow 34,301 130 NASDAQ 13,338
Indexes Affecting Rate Lock MediumNegativeWeekly Unemployment Claims (every Thursday)The first of this morning’s three economic reports was last week’s unemployment figures. It showed that only 201,000 new claims for benefits were filed last week, touching their lowest since back in January. Analysts were expecting 220,000 new filings, pointing towards a strengthening employment sector. This makes the report bad news for bonds and mortgage rates. MediumPositiveExisting Home Sales from National Assoc of RealtorsAugust's Existing Home Sales report was released at 10:00 AM ET today, revealing a 0.7% decline in home resales last month. This was a larger decline than was expected, hinting at housing sector weakness. Since a softening housing sector makes broader economic growth more difficult, this is good news for mortgage rates. However, this report doesn’t carry enough significance to offset the overall negative tone in bonds currently. MediumPositiveLeading Economic Indicators (LEI) from the Conference BoardAlso posted late this morning was August’s Leading Economic Indicators (LEI). As expected, the Conference Board announced a 0.4% decline. This means the indicators are pointing towards slower economic activity over the next several months. Accordingly, we can label this report favorable for bonds and mortgage rates. HighUnknownDomestic Political IssuesTomorrow doesn’t have anything scheduled that we need to be concerned about. Now that the FOMC meeting is behind us, attention should be turning towards the upcoming budget showdown. There doesn’t appear to be much optimism that a government shutdown can be avoided at this point. That scenario is actually favorable for bonds, so as we get closer to the end of the month without progress on a continuing resolution (CR) to keep government operations running until a budget deal is reached, we should see bonds and mortgage rates benefit from the chaos in Washington DC.
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.
