Rate Lock Advisory

Tuesday, July 16th

Tuesday’s bond market has opened in negative territory following stronger than expected consumer spending data. The major stock indexes are flat with the Dow down 1 point and the Nasdaq down 7 points. The bond market is currently down 11/32 (2.12%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.



30 yr - 2.12%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Retail Sales

The Commerce Department gave us today’s big economic news by posting June's Retail Sales report at 8:30 AM ET. They announced a 0.4% increase in retail-level sales, exceeding forecasts of a 0.4% rise. Even a secondary reading that excludes more volatile and costly auto transactions showed a stronger increase than was predicted. Those increases indicate that consumers spent more last month than many had thought. That is bad news for bonds and mortgage rates because consumer spending makes up almost 70% of the U.S. economy and the stronger spending levels is stronger economic growth.



Industrial Production and Capacity Utilization

June's Industrial Production data was also released this morning but at 9:15 AM ET. It showed an unchanged level of output at U.S. factories, mines and utilities. That was softer than the 0.2% increase that was expected, allowing us to consider the news favorable for mortgage rates. Unfortunately, the Retail Sales report carries much more significance than this report does. Therefore, the markets are reflecting results of the sales data more than this report.



Housing Starts (New Residential Construction)

Tomorrow also has two items we will be watching, starting with June's Housing Starts at 8:30 AM ET. This report will give us an indication of housing sector strength and future mortgage credit demand, but usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. It is expected to show little change in the number of construction starts of new homes between May and June. The lower the number of starts, the better the news it is for the bond market as it would indicate a weaker than expected new home portion of the housing sector.



Fed Beige Book

The day’s second release comes during afternoon trading. The Federal Reserve will release its Beige Book report at 2:00 PM ET. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by Fed region throughout the U.S. If there are any significant changes in conditions since the last update, we could see afternoon moves in the markets and mortgage rates. Signs of weakness should translate into bond strength and better mortgage pricing.

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... Lock 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.