Rate Lock Advisory

Wednesday, January 18th

Wednesday’s bond market has opened in well in negative territory, erasing yesterday’s gains. The major stock indexes are mixed but calm with the Dow down 3 points and the Nasdaq up 14 points. The bond market is currently down 12/32 (2.36%), which should push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point.



30 yr - 2.36%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Consumer Price Index (CPI)

December's Consumer Price Index (CPI) kicked off today’s calendar at 8:30 AM. It showed a 0.3% increase in the overall reading and a 0.2% rise in the core data that excludes volatile food and energy prices. These readings pegged expectations and indicate inflation rose moderately at the consumer level of the economy last month. Since the report showed no major surprises, we can consider the data to be neutral-to-slightly negative for bonds and mortgage rates.



Industrial Production and Capacity Utilization

The second report of the day was December's Industrial Production data at 9:15 AM ET. It revealed a 0.8% rise in output at U.S. factories, mines and utilities. That was a little stronger than the 0.6% that was expected, indicating manufacturing sector strength. Therefore, we can consider the data negative for bonds and mortgage rates.



Fed Beige Book

We also have the Federal Reserve's Beige Book release at 2:00 PM ET to watch. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. Of particular interest is information regarding inflation, unemployment or future hiring. If there is a reaction to the report, it will come during mid-afternoon trading.



Weekly Unemployment Claims (every Thursday)

Tomorrow has two 8:30 AM ET economic reports being posted, but neither are considered to be highly important. The first will be last week’s unemployment figures. They are expected to show that 252,000 new claims for unemployment benefits were filed last week, up from the previous week’s 247,000. The larger the number of claims, the better the news it is for bonds and mortgage rates because rising claims is a sign of a softening employment sector. However, this is only a weekly snapshot of the sector, so its influence on mortgage rates is often weak unless it shows a significant variance from forecasts.



Housing Starts (New Residential Construction)

December's Housing Starts will also be posted early tomorrow. It helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don't see it causing much movement in mortgage rates but does carry the potential to affect them slightly if it shows a significant surprise. Analysts are expecting to see an increase in new home starts between November and December.

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.