Rate Lock Advisory

Sunday, March 26th

This week has four monthly and quarterly economic reports scheduled for release in addition to a couple of Treasury auctions. None of the reports are considered to be major or key reports, but one of them does include an important inflation reading within the other data. Tomorrow has nothing scheduled that we need to be concerned about, the only day without at least one item.

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Bonds

Market Closed

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Dow

Market Closed

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NASDAQ

Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Unknown

Consumer Confidence Index

March's Consumer Confidence Index (CCI) will kick off this week's calendar late Tuesday morning. The New York-based Conference Board will post this index, giving us an indication of consumers' willingness to spend. Bond traders watch this data closely because consumer spending makes up over two-thirds of our economy. Data showing that consumer confidence in their own financial situation is falling indicates that consumers are less apt to make a large purchase in the near future. Analysts are expecting to see a decline, bringing the index down to 101.5 from February’s 102.9. Good news for rates would be a smaller than predicted number.

Medium

Unknown

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

The Treasury auctions that are most likely to affect mortgage rates are set for Tuesday and Wednesday. 5-year Notes will be sold Tuesday while 7-year Notes will go Wednesday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly with weak demand from investors, we could see selling in the broader bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors that translates into lower mortgage rates. Results will be posted at 1:00 PM ET each auction day, so look for any reaction to come during early afternoon hours Tuesday and/or Wednesday.

Low

Unknown

GDP Rev 2 (month after Rev 1)

Thursday has the second revision to the 4th Quarter GDP at 8:30 AM ET. The Gross Domestic Product is the total of all goods and services produced in the U.S. and is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 2.7% last quarter, unchanged from the previous estimate that was announced last month. Analysts are now more concerned with next month's preliminary reading of the 1st quarter than data from three to six months ago. Accordingly, unless we see a significant revision, this report probably will have little impact on Thursday's mortgage rates.

Medium

Unknown

Personal Income and Outlays

February's Personal Income and Outlays report is set for release Thursday morning. This data helps us measure consumers' ability to spend and current spending habits, which is important to the mortgage market because of the influence that consumer spending-related information has on the financial markets. If income is rising, consumers are more likely to make additional purchases in the near future. Therefore, weaker than expected readings would be good news for bonds and mortgage rates. Also in this release is an important inflation index (PCE) that the Fed uses to gauge inflationary pressures. Forecasts are currently calling for a 0.3% rise in February's income and the same in spending. Analysts are predicting the core PCE index to rise 0.4%. The weaker the readings, the better the news it will be for mortgage rates.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

Friday's second report comes from the University of Michigan at 10:00 AM ET. Their revised March Consumer Sentiment Index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. Rising confidence is considered bad news for the bond market and mortgage pricing because it usually means consumers are more willing to make large purchases. Friday's report is expected to show a reading of 63.4, unchanged from the preliminary estimate posted two weeks ago. Favorable results for bonds and mortgage rates would be a sizable decline in confidence.

Medium

Unknown

Fed Talk

Also worth noting is a large number of Fed member speaking engagements that will be watched. Now that the FOMC meeting is behind us, the mandatory quiet period for its members has expired, allowing for individual thoughts to be heard about the economy, inflation and other related topics. They are spread throughout the week and will continue to be over the next several weeks. Many of these speeches will be uneventful, but traders will be listening for any surprise tidbits of information. They take place any time from early morning to evening hours, so they can come into play at any time. Of particular interest may be Tuesday and Wednesday morning when Vice Chair for Supervision Michael Barr appears before congress to speak about bank oversight.

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Unknown

none

Overall, Friday is a good candidate for most important day, but Tuesday may be noticeably active for rates also. The calmest day could be Wednesday unless something unexpected happens. If still floating an interest rate and closing in the near future, it would be prudent to keep a close eye on the markets.

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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