Rate Lock Advisory

Monday, October 21th

Monday’s bond market has opened in negative territory due to weekend news about Britain’s hopes of leaving the European Union (Brexit). The major stock indexes are starting the week with minor gains, pushing the Dow higher by 10 points and the Nasdaq up 33 points. The bond market is currently down 6/32 (1.77%), but this morning’s mortgage rates should be close to Friday’s early pricing.



30 yr - 1.77%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Geopolitical/Financial Issues

There is nothing of importance being released or taking place today. The Brexit news of an extension being requested from Britain to delay the breakaway is making the possibility of a smooth transition more likely. The current deadline for the breakup was October 31st with or without trade and immigration deals in place in with the EU. A hard breakaway (without agreements in place) is believed to be more disruptive to the global economy, making that path more favorable to bonds and mortgage rates. Even though there is still plenty of political turmoil in Britain, the fact that an extension has been requested and is being considered by the EU is having a negative impact on bond trading this morning.




The rest of the week brings us the release of four economic reports that may influence mortgage rates in addition to two Treasury auctions that have the potential to do so also. The most important data comes later in the week.



Existing Home Sales from National Assoc of Realtors

September's Existing Home Sales data will kick-off this week’s activities at 10:00 AM ET tomorrow. This National Association of Realtor’s report will give us an indication of housing sector strength and mortgage credit demand by tracking home resales. It is expected to show a small increase in sales from August to September. That would be relatively bad news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors. Ideally, it will show a sizable decline in sales that points toward a weakening housing sector.



Corporate Earnings

Also worth noting is that corporate earnings season is in full swing. There are plenty of big-named companies releasing their quarterly and annual earnings reports this week. Strong earnings are good news for stocks and bad news for bonds. Generally speaking, if earnings are missing expectations, bonds should rally and mortgage rates should move lower. With plenty of them posting this week, stocks could have a heavy influence on bond trading and mortgage pricing any day.




Overall, Thursday is the best candidate for most important day of the week due to the Durable Goods report while Wednesday may be the calmest. Even though we don’t have key economic data or relevant Fed events taking place, there still are enough variables in place that could make this a very active week for the markets and mortgage rates. Therefore, it would be prudent to keep an eye on the markets 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.