Rate Lock Advisory

Monday, April 7th

Monday’s bond market initially opened in negative territory but has since fallen sharply over the past few minutes. Stocks have also changed direction with the Dow now up 398 points after being down 953 points just a short while ago. The Nasdaq went from a loss of 253 points to a gain of 226 points. The bond market is currently down 24/32 (4.09%), which with late weakness Friday should cause an increase in this morning’s mortgage rates of approximately .500 - .625 of a discount point compared to Friday’s early pricing. If you saw an intraday increase late Friday, you should see another change of around the same size this morning.

24/32

Bonds

30 yr - 4.09%

398

Dow

38,713

226

NASDAQ

15,817

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM
Created with Raphaël 2.1.22.37%3.0125%3.6550000000000002%4.2975%4.94%12/15/20188/2/20183/25/201811/9/20177/3/20173/2/201710/18/20166/5/20162/5/20169/29/20155/17/20152/4/2015
National Average
1/1/2019
30 Year Fixed: 4.55%
15 Year Fixed: 4.01%
5/1 ARM: 2.76%

Indexes Affecting Rate Lock

High

Negative

Tariff News

This morning was expected to open one way and in the last 15 minutes that all went away. Big losses in overnight futures pointed to another ugly morning for stocks and bonds were looking to be the beneficiary again with overseas trading in bonds posting solid gains. What caused that change? Obviously, it is tariff-related headlines. Particularly, a rumor that President Trump is considering a 90-day pause on the tariffs he announced last week. That news is causing significant volatility in the markets this morning and will likely do so throughout the day. Whether or not there is an official announcement of the delay remains to be seen. It would be a good idea to keep an eye on the markets today since it is quite possible to see stocks slide back into negative ground and/or bonds recover some of their losses before the end of the day.

High

Negative

Geopolitical/Financial Issues

There is a decent chance that the tariff party if over for bonds. We saw bonds rally late last week as funds were shifted into the safety of the bond market as a knee-jerk reaction of many traders to stocks tanking. If traders are turning their attention to the rise in inflation that the tariffs are going to cause, it is hard to justify continuing the bond rally. Fears of a potential recession in the economy are legitimate and would create a favorable environment for bonds and mortgage rates. However, that is just speculation at this point. We probably won’t see that theory affect bond trading until there is data released that supports it.

High

Unknown

None

Tomorrow also lacks any relevant economic releases. This should keep bonds focused on the stock markets and tariff impacts for another day or two. The remainder of the week has only three monthly economic reports set for release, but two of them are highly important to the markets. We will also get the minutes from last month’s FOMC meeting and two Treasury auctions of long-term securities midweek, in addition to a handful of Fed-member speaking engagements that we will watch even though none appear likely to have a direct impact on mortgage rates.

High

Unknown

Consumer Price Index (CPI)

Overall, Wednesday’s consumer inflation reading (CPI) makes it the most important day of the week (with exception to today’s action). That said, no day is likely to be calm for rates due to the scheduled events and tariff headlines possible at any time. We saw a nice downward move in rates last week as stocks tanked, but please proceed cautiously if still floating an interest rate and closing in the near future. It looks as if the momentum in bonds and lower mortgage rates is quickly stalling.

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.