Rate Lock Advisory

Tuesday, June 18th

Tuesday’s bond market has opened in positive territory due to comments from overseas that indicate concerns about Europe’s economy. The major stock indexes are rallying with the Dow up 348 points and the Nasdaq up 138 points. The bond market is currently up 6/32 (2.07%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.



30 yr - 2.07%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Housing Starts (New Residential Construction)

This morning’s only economic data failed to have an impact on the markets. May's Housing Starts was posted at 8:30 AM ET, revealing a 0.9% decline in new home groundbreakings. Analysts were expecting to see a small increase in home starts, so the headline number appears to be good news for bonds and mortgage rates. However, a sizable upward revision to April’s starts skewed this morning’s results and left the number of groundbreakings higher than original forecasts. In other words, while a decline is good news for rates, we still saw a higher number of starts than was expected. Because this data is not considered to be highly important, it took a backseat to the other news of the morning.



Geopolitical/Financial Issues

That other news came from European Central Bank (ECB) president Mario Draghi. While speaking at conference he indicated that the ECB is likely to make further rate cuts and take other stimulus measures to boost economic growth there. He also hinted that this is being discussed by the ECB already, meaning it is not just his opinion. Since a weaker European economic makes a global economic slowdown more likely, this was taken as good news for bonds and mortgage rates. Even stocks are having a positive reaction to the news because it makes one or two rate cuts by our Fed more likely before the end of the year.



Federal Open Market Committee (FOMC) Statement

Tomorrow does not have any relevant economic data being released but does have several Fed events taking place during afternoon hours. The first is the 2:00 PM adjournment of the FOMC meeting that began today. This is when Fed Chairman Powell and company will decide whether or not to change key short-term interest rates. The consensus is that they will not make a change at this meeting. Because there is a wide consensus, the lack of a move itself shouldn't have a noticeable impact on the markets. But what is likely to heavily influence trading is any indication of when the Fed may make their next move, which is believed to be a possible rate cut. If there is a hint of that being a reality soon, the bond market should rally, causing mortgage rates to improve.



Misc Fed

Also at 2:00 PM ET tomorrow, the Fed will release their updated estimates for future economic activity. They will post their predictions on GDP growth, unemployment and inflation. These could be a market mover if they show even minor revisions to any of the key headline economic numbers. The larger the change, the more likely the markets will react. Revisions that point toward slower economic growth would be good news for the bond market and mortgage rates.



Fed Talk

They will be followed by a press conference hosted by Chairman Powell at 2:30 PM ET. These press conferences with the media can lead to significant afternoon volatility in the markets and mortgage rates. Any surprises will probably cause a noticeable reaction in the markets. That means there is a high probability of seeing afternoon changes to mortgage rates tomorrow.

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.