Rate Lock Advisory

Tuesday, August 5th

Tuesday’s bond market has opened in negative territory despite favorable results in today’s economic data. Stocks are mixed with the Dow down 73 points and the Nasdaq up 17 points. The bond market is currently down 5/32 (4.21%). However, gains late yesterday should help keep this morning’s mortgage rates close to Monday’s early levels. If you saw an intraday improvement before closing, you should see a small increase in rates this morning.

5/32

Bonds

30 yr - 4.21%

73

Dow

44,099

17

NASDAQ

21,071

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

ISM Service Index

The Institute for Supply Management (ISM) gave us their non-manufacturing index (aka service index) at 10:00 AM ET this morning. They announced a reading of 50.1 for July that was a decline from June’s 50.8 and noticeably short of the 51.2 that was expected. July’s unexpected decline means fewer surveyed service-sector executives felt business improved during the month than did the previous month. Since this is a sign of economic weakness, we can consider the data favorable for bonds and mortgage rates even though it doesn’t show in this morning’s early trading.

Medium

Unknown

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

Tomorrow doesn’t have a relevant economic report for the markets to digest, but there is a 10-year Treasury Note auction taking place that may affect bond trading and mortgage pricing during afternoon hours. The results of the sale will be posted at 1:00 PM ET, meaning if there is a reaction, it should come during early afternoon trading. Good news for mortgage rates would be a strong demand for the securities, which could lead to an intraday improvement in rates. On the other hand, lackluster interest from investors may cause bond weakness and an increase to 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.

BRS, REALTORS®

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