Rate Lock Advisory

Tuesday, January 19th

Tuesday’s bond market has opened in negative territory following overnight gains in international stocks and comments about future stimulus plans. The Dow is currently up 130 points while the Nasdaq has gained 99 points. The bond market is currently down 8/32 (1.11%) but gains late Friday should help keep this morning’s mortgage rates nearly unchanged. The financial and mortgage markets were closed yesterday for the Martin Luther King Jr. holiday.

8/32

Bonds

30 yr - 1.11%

130

Dow

30,944

99

NASDAQ

13,098

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

Economic Stimulus News

There is no relevant economic data scheduled for release today. What appears to be driving this morning’s stock gains and bond weakness is news that former Fed Chair and Treasury Secretary nominee Janet Yellen will call for a large amount of stimulus during her Senate confirmation hearing to boost the economy and help prevent long-term damage from the pandemic. This news reminds us that a large stimulus package will be funded through the bond market. The additional supply added will make current securities less appealing to investors and also raises concerns about inflation in the future. Those factors can lead to higher bond yields and mortgage rates, so we are seeing a negative reaction this morning.

Medium

Unknown

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

The first item on this week’s calendar comes tomorrow afternoon when results of this week’s 20-year Treasury Note auction are posted. These auctions show what type of demand investors have for long-term securities. If demand is strong in the sale, particularly from international buyers, we could see the broader bond market improve after results are posted at 1:00 PM ET like we did last week with the 10-year Note and 30-year Bond sales. On the other hand, lackluster interest in the securities may lead to an upward revision to rates before the end of the day.

Medium

Unknown

Corporate Earnings

Also worth noting is the fact that we are heading into corporate earnings season. As big-named companies report their results, stocks should react accordingly. Stronger than expected earnings will likely boost stocks and hurt bond prices, pushing mortgage rates higher. Generally speaking, news that is good for stocks is bad for bonds and mortgage rates. However, disappointing results could lead to lower mortgage rates. With little economic data or other events scheduled this week to drive trading, stocks may end up being the biggest influence on mortgage rates.

Medium

Unknown

None

Overall, no day stands out as a strong candidate for most active day of the week. If wondering, tomorrow’s inauguration should be a non-event for the markets, especially mortgage rates. There is little data for the markets to digest, leaving stocks to be the focus several days. If the major stock indexes remain fairly calm, bonds and mortgage rates could follow suit. On the other hand, active stock markets could lead to noticeable moves in mortgage rates this week.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.