Rate Lock Advisory

Thursday, April 15th

Thursday’s bond market has opened well in positive territory despite stronger than expected economic data. Stocks are rallying on the same news with the Dow up 223 points and the Nasdaq up 133 points. The bond market is currently up 18/32 (1.57%), but weakness late yesterday is going to limit the improvement in this morning’s mortgage rates to approximately .125 of a discount point.



30 yr - 1.57%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Fed Beige Book

Yesterday afternoon’s release of the Fed Beige Book report showed that the economy grew at a moderate pace during the late February through early April period, fueled heavily by the $1,400 economic stimulus checks. There were also reports of rising inflation that could be detrimental to long-term securities such as mortgage bonds. This news did not come as a surprise, meaning the bond market and mortgage pricing had little reaction to the report.



Retail Sales

Today’s major economic release was March's Retail Sales data at 8:30 AM ET that showed consumer level spending rose a whopping 9.8%. Additionally, a secondary reading that excludes more volatile and costly auto transactions jumped 8.4%. Both readings were well above forecasts of 5.4% and 4.9% respectively, indicating consumers spent much more than expected last month. While higher spending levels are good news for the economy and bad news for bonds and mortgage rates, it is obvious these numbers are skewed by the stimulus funds that were received during that period. This likely why we have not seen a strong negative reaction to the report.



Weekly Unemployment Claims (every Thursday)

Also at 8:30 AM ET was the release of last week’s unemployment update. It revealed only 576,000 new claims for benefits were filed, falling short of the predicted 695,000 initial filings and down from the previous week’s revised 769,000. Declining claims is a sign the employment sector is strengthening. Therefore, we can also consider this data to be bad news for the bond and mortgage markets. Fortunately, this is only a weekly snapshot, preventing a negative influence on today’s mortgage pricing.



Industrial Production and Capacity Utilization

Today’s third release was March's Industrial Production data that showed a 1.4% rise in output at U.S. factories, mines and utilities. The increase shows a rebound in manufacturing activity from February’s large decline but was still weaker than expectations. Forecasts were calling for a 2.8% increase in output. This allows us to consider the data favorable for mortgage rates.



Housing Starts (New Residential Construction)

Tomorrow brings us two more economic reports to watch, starting with March's Housing Starts at 8:30 AM ET. This data tracks groundbreakings of new home construction and gives us a measurement of housing sector strength. The report is expected to show a sizable increase in new starts last month, indicating strength in the housing sector.



University of Michigan Consumer Sentiment (Prelim)

The week closes with the University of Michigan's Index of Consumer Sentiment for April at 10:00 AM ET. This index will give us an indication of consumer confidence that hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial or employment situations, they probably will delay making that purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a sizable decline from March's 84.9 reading. Current forecasts are calling for a reading of approximately 88.0.

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.