Rate Lock Advisory

Wednesday, September 26th

Wednesday’s bond market has opened in positive territory ahead of today’s FOMC events. Stocks are showing modest gains of 15 points in the Dow and 2 points in the Nasdaq. The bond market is currently up 5/32 (3.08%), which should improve this morning’s mortgage rates by slightly less than .125 of a discount point.

5/32


Bonds


30 yr - 3.08%

15


Dow


26,507

2


NASDAQ


8,009

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low


Neutral


New Home Sales

This morning’s only relevant economic data was August's New Home Sales report at 10:00 AM ET. The Commerce Department announced a 3.5% rise in sales of newly constructed homes. This was a larger increase than forecasts were calling for. However, a downward revision to July’s sales is the cause of the variance. The number of August’s sales was very close to expectations. That makes the data mostly neutral towards bonds and mortgage rates.

High


Unknown


Federal Open Market Committee (FOMC) Statement

We have a few afternoon events that are highly important to the financial and mortgage markets, all surrounding the Fed. They start with the FOMC meeting that is widely expected to yield a quarter-point increase to key short-term interest rates. It will adjourn at 2:00 PM ET. What will be of interest is verbiage in the post-meeting statement that may hint when the Fed will make their next move. There is a consensus that they will make another move in December’s meeting, their fourth of the year.

Medium


Unknown


Misc Fed

Also at 2:00 PM ET, the Fed will release their revised economic projections for the U.S. The markets are interested in whether Fed Chairman Powell and friends think economic conditions will be stronger or weaker in the coming months and years than previously thought. Key readings the markets will be looking for are the unemployment rate, inflation and overall GDP growth. Downward revisions by the Fed will be good news for bonds and mortgage pricing because it would mean another bump to key short-term interest rates before the end of the year may not be a sure thing after all. On the other hand, upward revisions that indicate the economy is likely to support a Fed rate hike could cause bond selling and an increase to mortgage rates.

High


Unknown


Fed Talk

Those events will be followed by a press conference with Chairman Powell at 2:30 PM ET. All Fed meetings are highly important, but this one is particularly significant for the financial and mortgage markets due to the uncertainty of when the Fed will make another monetary policy move and their expectations for next year. Analysts and market traders will be watching his words carefully for any indication on what the Fed’s plans are. Any question or answer at the press conference can impact the markets, so there is a decent chance of seeing quite a bit of volatility this afternoon.

Medium


Unknown


None

There is data scheduled for release tomorrow that is expected to affect mortgage rates, but they will be addressed in this afternoon’s update. This report will be revised to reflect the Fed results shortly after the markets have an opportunity to react to them.

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.