Rate Lock Advisory

Thursday, March 26th

Thursday’s bond market has opened in negative territory with only a weekly unemployment update today’s sole economic data. Stocks are mixed with the Dow up 61 points and the Nasdaq down 127 points. The bond market is currently down 7/32 (4.36%), which should cause an increase in this morning’s mortgage rates of approximately .125 of a discount point.

7/32

Bonds

30 yr - 4.36%

61

Dow

46,491

127

NASDAQ

21,802

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Unknown

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

Yesterday’s 5-year Treasury Note auction drew a weak interest from investors. The benchmarks we use to gauge demand indicated it was low. We saw little reaction in the broader bond market after results were posted at 1:00 PM ET. Fortunately, this is a shorter-term security that isn’t usually reflective of demand for mortgage bonds. However, yesterday’s sale leaves us little to be optimistic about in today’s 7-year Note auction. Generally speaking, a strong demand from investors is good news for the bond market and could lead to a modest improvement in rates before the end of the day, assuming there are no new headlines from Iran.

Medium

Neutral

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update showed 210,000 new claims for jobless benefits were filed. This was an increase from the previous week’s 205,000 initial filings, but pegged expectations. Since there was no surprise in the numbers of claims and this just a weekly update instead of more influential monthly reports, we are labeling the data neutral for mortgage rates.

Medium

Negative

Geopolitical/Financial Issues

News from Iran last night is what is driving bond trading this morning. They have apparently declined President Trump’s 15-point plan to peace and are downplaying the so-called negotiations that the U.S. is implying are underway. This all goes to the theory that conflict will be ongoing for a while and has pushed oil prices higher. High oil prices fuel inflation in the economy, making long-term securities such as mortgage bonds less appealing to investors. This is also a reminder that we can’t rely on headlines from either side for investing purposes. Yesterday’s rally in stocks and bonds was fueled almost exclusively by that peace proposal, only to be nixed the same day.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

The University of Michigan will release their revised March Index of Consumer Sentiment at 10:00 AM ET tomorrow. It will give us an indication of consumer confidence in their own financial situations. Declining confidence is considered good news for the bond market and mortgage pricing because consumers are likely to spend less when concerned about their finances, helping to restrict economic growth. Tomorrow's report is expected to show a reading of 54.0, which would be a downward revision from the initial estimate earlier this month. Favorable results for bonds and mortgage rates would be a much lower reading than forecasted.

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.

Victoria Capital Mortgage Company

455 Los Gatos Blvd. Suite 100
Los Gatos, CA 95032
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