Rate Lock Advisory

Monday, October 15th

Monday’s bond market has opened in positive territory following favorable economic news. The stock markets are starting the week with moderate losses, pushing the Dow down by 71 points and the Nasdaq down by 75 points. The bond market is currently up 6/32 (3.14%), which should keep this morning’s mortgage rates at Friday’s early levels. We saw some weakness late Friday that caused a few lenders to revise pricing higher. This morning’s gains simply offset that weakness, taking us back to where we were Friday morning.



30 yr - 3.14%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Retail Sales

September's Retail Sales report was released at 8:30 AM ET this morning, revealing a 0.1% increase in retail-level sales from August. This was well below forecasts of a 0.6% increase, meaning consumers spent much less last month than many had expected. That is very good news for bonds and mortgage rates because consumer spending makes up approximately 70% of the U.S. economy. Weaker than expected consumer spending means the economy may not be as strong as predicted, making mortgage-related bonds more appealing to investors. Oddly though, we have seen a minimal reaction in bonds when a more favorable move is justified.




The rest of the week brings us four more pieces of monthly economic data that are relevant to mortgage rates in addition to the minutes from last month’s FOMC meeting. Also being watch is news about Britain’s exit from the European Union (Brexit). This is an important week for negotiations of Britain’s exit, so related news could affect the markets. Furthermore, earnings season is starting this week. Stronger corporate earnings usually have a negative impact on bonds and mortgage rates while disappointing results could lead to more bond buying and lower mortgage pricing.



Industrial Production and Capacity Utilization

Tomorrow’s sole economic release will be September's Industrial Production data at 9:15 AM ET. This report will give us an indication of manufacturing strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting it to show a 0.3% increase in output from August's level, meaning that manufacturing activity strengthened slightly last month. A large increase in production would be negative for bonds and mortgage rates as it would indicate economic strength. A decline in output would be favorable for mortgage shoppers.



Federal Open Market Committee (FOMC) Minutes

Overall, today was expected to be the most important day for mortgage rates due to the importance of this morning’s Retail Sales data, but Wednesday could be active also if the FOMC minutes show some surprises. The calmest day should be Thursday unless something unexpected happens. As we saw last week, the markets can get very active without warning. Therefore, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

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.