Rate Lock Advisory

Thursday, October 16th

Thursday’s bond market has opened in negative territory with stocks showing early gains and little else to drive trading. Stocks are showing moderate strength with the Dow up 82 points and the Nasdaq up 110 points. The bond market is currently down 4/32 (4.04%), which should cause this morning’s mortgage rates to be slightly higher than Wednesday’s early pricing.

4/32

Bonds

30 yr - 4.04%

82

Dow

46,335

110

NASDAQ

22,780

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

Fed Beige Book

Yesterday afternoon’s release of the Fed Beige Book didn’t show any major surprises. It indicated the U.S. economy was a bit lethargic during the period from late August to the first week of October. Only three of the Fed’s twelve regional banks reported economic activity expanded during that time frame, while the remaining nine reported flat or slowing activity. The report also showed consumer spending appears to be slowing, making broader economic growth more difficult. Furthermore, the report revealed the employment sector continues to soften. These points can all be labeled as favorable for bonds and mortgage rates.

Medium

Negative

Fed Beige Book

Unfortunately, the Beige Book also gave signs that inflation is still rising with some areas being directly attributed to tariffs. Some businesses are now passing those additional costs on to their customers while others are still trying to absorb them in part or wholly. This portion of the report is bad news for the bond and mortgage markets because rising inflation makes long-term securities less appealing to investors and mortgage rates are based on long-term debt.

High

Unknown

General Bond Trends

As we mentioned yesterday, we are watching the benchmark 10-year Treasury Note yield closely as it dropped near the important 4.00% threshold again. It failed to break below yesterday and doesn’t appear likely to do it today either. This has been a pretty strong resistance level, having not broken below it in over a year. If bonds gain enough momentum to move it below that level, we could see a downward trend in mortgage rates begin. However, another failed attempt may lead to higher bond yields and mortgage rates in the immediate future.

High

Unknown

Consumer Price Index (CPI)

There is no newsworthy economic data coming today or tomorrow due to the government shutdown. This week’s major Consumer Price Index (CPI) has been set for release next Friday. Government staff are being called back to work to compile the data and release it because it is this month’s update that will determine the annual Cost of Living Adjustment (COLA) for social security recipients. It also will give the Fed another look at inflationary pressures before their FOMC meeting the following week. All the other reports scheduled for this week have been delayed indefinitely.

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.

Dayspring Bank

NMLS # 721567

5370 S 72nd St
Ralston, NE 68127-2854
Equal Housing LenderMember FDIC
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