Rate Lock Advisory

Sunday, December 22th

This holiday-shortened week has only three relevant monthly economic reports set for release in addition to a couple of Treasury auctions. All of the monthly reports come over just two days due to the Christmas holiday. None of them are considered to be key pieces of data but two carry enough importance to cause a change to mortgage pricing if they show surprises. Now that a government shutdown has been averted for at least a few months, we don’t have to worry about the potential impacts on the mortgage industry and data releases.

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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

Activities start late tomorrow morning with the release of December's Consumer Confidence Index (CCI). This Conference Board release gives us an indication of consumer willingness to spend. If consumers are more confident about their personal financial and employment situations, they are more apt to make a large purchase in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched closely by market participants and can affect mortgage rate direction. Current forecasts are calling for a rise in confidence from November's reading of 111.7, meaning consumers felt a little more optimistic about their own financial situation than they did last month. A reading well below the expected 113.5 would be good news for mortgage rates.

High

Unknown

Durable Goods Orders

Tuesday has two reports scheduled, beginning with November's Durable Goods Orders at 8:30 AM ET. It tracks new manufacturing orders for big-ticket items or products that are expected to last at least three years such as appliances, airplanes and electronics. Analysts are expecting the report to show a 0.3% decline in new orders. A larger decline would indicate that the manufacturing sector was weaker than many had thought, making it good news for the bond market and mortgage rates. This data is known to be quite volatile from month-to-month, so it will take a wide variance from forecasts for the data to cause a noticeable move in rates.

Low

Unknown

New Home Sales

November's New Home Sales figures will be released at 10:00 AM ET Tuesday. It is the sister report of last week's Existing Home Sales report but covers a much smaller portion of the housing market and carries less significance. A weakening housing sector is considered good news for the bond market and mortgage rates. This version is expected to show an increase in sales of newly constructed homes, signaling housing strength. However, it is highly likely that this report will have little impact on Tuesday's mortgage pricing.

Medium

Unknown

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

There are two relatively important Treasury auctions this week that may influence bond trading enough to affect mortgage rates slightly. First will be an auction of 5-year Treasury Notes Tuesday followed by 7-year Notes Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, meaning investor demand was soft, we could see broader selling in the bond market that leads to upward revisions in mortgage rates. On the other hand, strong investor demand usually makes bonds more attractive to investors and brings funds into the bond market. Results of the sales will be posted at 1:00 PM ET each day. If there is a reaction to the sales, it should be minor and come shortly after those results are posted.

Low

Unknown

Holiday Schedule

Also worth noting is the fact the bond market will close at 2:00 PM ET Tuesday ahead of Wednesday's Christmas Day holiday. Stocks will trade until 1:00 PM and will also be closed Wednesday. The markets will reopen for regular trading Thursday morning. These early closings sometimes lead to pressure in the bond market as traders look to protect themselves from potential headlines over the holiday. However, that is more of a concern when the holiday creates a three or three and a half day weekend than it is with a single day closure.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

The only other relevant economic data coming this week will be Thursday morning’s weekly unemployment update. We will likely see light trading Thursday and Friday as many bond trading firms will be working on a skeleton staff as traders make an extended holiday weekend. This simply means that we shouldn’t be too excited about an improvement in rates or concerned about an increase. When there is thin trading in the market, moves are exaggerated by the light volume and will be corrected when regular volume returns next Monday.

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Unknown

none

Overall, no day stands out as the most important for mortgage rates. We should see moderate movement in rates, at best, unless something unexpected happens. The calmest day will probably be Friday since there are weekly unemployment claims being released Thursday along with a Treasury auction. We are expecting a fairly quiet week 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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