Rate Lock Advisory

Friday, January 14th

Friday’s bond market has opened well in negative territory despite quite favorable results from today’s economic reports. Stocks are mixed with the Dow down 161 points and the Nasdaq up 41 points. The bond market is currently down 16/32 (1.75%), which should push this morning’s mortgage rates higher slightly. Preventing more of an increase are gains from late yesterday. If you saw an intraday improvement before closing, you may see a larger increase this morning.



30 yr - 1.75%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Retail Sales

The first of today’s batch of economic reports was the highly important Retail Sales report for December. The Commerce Department announced a very weak 1.9% decline in consumer sales, falling well short of the unchanged that was expected. Even more surprising was the 2.3% drop in sales if more volatile and costly auto transactions are excluded, when a 0.2% rise was predicted. There are theories floating as to why this happened (lack of supply in stores is one), but there is no debating that consumers spent far less last month than many had thought and great news for bonds and mortgage rates. Because consumer spending makes up two-thirds of the U.S. economy, this should be concerning in how it may affect overall economic growth in the coming months, supporting the thought process that the worst of this spike in rates is likely behind us.



Industrial Production

Next was December's Industrial Production data at 9:15 AM ET. It revealed a 0.1% decline in output at U.S. factories, mines and utilities last month. Forecasts were calling for a 0.3% increase in production. As a sign of weaker than expected manufacturing activity, we can label this report as favorable for mortgage rates also.



Univ of Mich Consumer Sentiment (Prelim)

The final report of the week was January's preliminary reading of the University of Michigan's Index of Consumer Sentiment at 10:00 AM. It came in at 68.8, down from December’s final 70.6. The lower reading means surveyed consumers don’t feel as confident about their own financial situations this month as they did last month. Waning confidence usually translates into softer consumer spending levels (see this morning’s Retail Sales report). Therefore, we can consider the report slightly favorable for bonds and mortgage pricing.



Weekly Unemployment Claims (every Thursday)

Next week doesn’t have too much scheduled that is likely to drive mortgage rates. The week starts with the markets closed Monday for the Martin Luther King Jr. holiday. We only have a couple of monthly economic reports set to be posted, with the majority being housing related. There also is a 20-year Treasury Bond auction midweek that could affect rates during afternoon trading one day. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

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.