Rate Lock Advisory

Thursday, April 11th

Thursday’s bond market has opened in negative territory following mixed economic news. The major stock indexes are also mixed with the Dow down 132 points and the Nasdaq up 47 points. The bond market is currently down 3/32 (4.55%), which with yesterday’s afternoon selling should push this morning’s mortgage rates higher by approximately .250 - .375 of a discount point if compared to Wednesday’s early pricing. If you saw an intraday increase in rates late yesterday, you should see a smaller increase this morning.



30 yr - 4.55%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



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

Yesterday’s 10-year Treasury Note auction went quite poorly with the benchmarks pointing to a weak demand from investors. This didn’t come as a surprise since this type of security is sensitive to inflation and loses appeal when it is rising. Yesterday’s stronger consumer inflation data likely contributed to the lackluster auction. Bond selling had snowballed since the early morning CPI release, but definitely made another move after the auction results were announced at 1:00 PM ET. Unfortunately, yesterday’s events and auction results prevent us from being optimistic about today’s 30-year Bond auction. If today’s sale draws a similar interest (or lack of), we could see another afternoon increase to mortgage rates before closing.



FOMC Meeting Minutes

Also posted yesterday afternoon were the minutes from last month’s FOMC meeting. The 2:00 PM ET release didn’t give us any big surprises. We already knew the Fed wants to see further proof inflation will continue move toward its preferred annual rate of 2.00% before they start to lower key short-term interest rates. There was discussion amongst Chairman Powell and friends that January and February’s higher inflation data may have just been seasonal adjustments. They did not know during the meeting (but we do now) that they were not just blips and inflation is indeed holding at higher levels. Bonds had a minimal reaction to the release of the minutes, as did mortgage rates.



Producer Price Index (PPI)

This morning brought us two economic releases, both at 8:30 AM ET. The more important of the two was March’s Producer Price Index (PPI) that showed inflation at the producer level was a little more subdued last month than the consumer level. The overall PPI rose 0.2% as did the more important core data that excludes volatile food and energy prices. Core inflation pegged expectations while the overall reading was predicted to rise 0.3%. Furthermore, the year-over-year numbers were much more favorable than yesterday’s data. Today’s report revealed a 0.2% decline from February’s annual rate with the core rate rising just 0.1%. On any other day this data would be considered neutral to slightly favorable. It stands out more positively this morning because it somewhat contrasts yesterday’s news.



Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update was also posted early this morning. It indicated only 211,000 new claims for unemployment benefits were filed, down from the previous week’s revised 222,000. Declining claims are a sign of employment sector strength, making the data bad news for bonds and mortgage rates.



Univ of Mich Consumer Sentiment (Prelim)

This week’s calendar closes late tomorrow morning with the release of the University of Michigan's Index of Consumer Sentiment for April. It will give us an idea of consumer confidence about their own financial situations, translating into willingness to spend. If they are growing more concerned about their personal finances, they probably will delay making a large purchase, limiting economic growth. Good news would be a sizable decline from March's 79.4 reading. Analysts are expecting to see a reading of approximately 78.8, signaling slightly weaker consumer spending activity may be coming 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.