Rate Lock Advisory

Thursday, September 11th

Thursday’s bond market has opened in positive territory following contradicting piece of economic data. The stock markets are rallying with the Dow up 457 points and the Nasdaq up 111 points. The bond market is currently up 10/32 (4.01%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

10/32

Bonds

30 yr - 4.01%

457

Dow

45,948

111

NASDAQ

21,957

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Unknown

Treasury Auctions (5,7,10,20,30 year)

Yesterday’s 10-year Treasury Note auction went well with the benchmarks pointing to a strong demand from investors. This means there is still a decent appetite for long-term securities and since mortgage rates are based on long-term debt, we can label the auction results as good news. We did see bonds improve after the results were posted at 1:00 PM ET, leading to some lenders revising mortgage pricing slightly lower. Many likely opted to wait for this morning’s data before reflecting that change. Results of this sale allow us to be optimistic about today’s 30-year Bond auction. If the 1:00 PM ET result announcement is similar to yesterday’s sale, we could see afternoon gains in bonds and a downward revision to rates.

High

Negative

Consumer Price Index (CPI)

This morning’s release of August’s Consumer Price Index (CPI) showed consumer level inflation rose from July, likely an impact of tariffs working their way through the economy. The overall CPI rose 0.4% last month while the core data that excludes volatile food and energy prices was up 0.3%. Forecasts had both readings up 0.3%. Even though the core data appears to have pegged expectations, it was actually rounded down to 0.3%, coming just a hair short of being rounded up to 0.4%. These numbers are a sign that inflation was a little stronger than many had thought last month.

High

Neutral

Inflation News

The annual numbers didn’t show any surprises. August’s overall reading ran at a year-over-year rate of 2.9%, up from July’s 2.7%. Core data held at July’s 3.1% annual pace. While one metric rose and the other was unchanged from the previous month, they both matched exactly what analysts were expecting to see. Accordingly, we are labeling the CPI report neutral to slightly negative for bonds and mortgage rates. In relation to the Fed, since there was no spike in consumer inflation, there is almost no chance the Fed will not cut key short-term interest rates next week. What the debate is now, is how much they will lower them by.

Medium

Positive

Weekly Unemployment Claims (every Thursday)

Also released early this morning was last week’s unemployment update that revealed 263,000 new claims for jobless benefits were filed, touching their highest level since October 2021. Forecasts had them slipping from the previous week’s revised 236,000 initial filings. The increase is another sign of weakness in the employment sector of the economy that makes the report good news for bonds and mortgage rates. In fact, it looks as if this report is having more of an impact on this morning’s bond trading than the highly important consumer inflation data.

Medium

Unknown

Univ of Mich Consumer Sentiment (Prelim)

The University of Michigan's Index of Consumer Sentiment for September will close out this week's calendar at 10:00 AM ET tomorrow morning. This index gives us an indication of consumer confidence in their own financial situations, projecting consumer willingness to spend. If a consumer's confidence in their own financial situation is rising, they are more apt to make large purchases in the near future. But if they are growing more concerned about their job security or finances, they probably will delay making that sizable purchase. This influences future consumer spending data and therefore impacts the financial markets. The lower the reading, the better the news for mortgage rates.

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.

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