Rate Lock Advisory

Wednesday, July 28th

This week’s Federal Open Market Committee (FOMC) meeting has adjourned with an announcement of no changes being made to key short-term interest rates. This was widely expected as the Fed had previously indicated they needed to see the employment situation improve significantly before considering a rate increase.



30 yr - 1.25%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Federal Open Market Committee (FOMC) Statement

What was of interest was comments in the post-meeting statement and during Chairman Powell’s press conference that indicated the Fed was nearing the time to start reducing the amount of their monthly bond purchases (tapering). While that is a negative for bonds and mortgage rates since the Fed is a significant buyer in the market right now, traders knew tapering was coming sooner than later. Surprisingly though, bonds have reacted positively after this afternoon’s events.




Stocks are still mixed with the Dow down 88 points and the Nasdaq up 116 points. The bond market has improved from this morning’s level, currently down only 2/32 (1.25%). This is enough of a move for some lenders to slightly improve mortgage pricing, but most are likely to wait until tomorrow’s economic data before reflecting this change.



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

There was no economic data posted this morning. Yesterday’s 5-year Treasury Note auction was uneventful. The benchmarks showed an average level of interest in the securities compared to other recent sales. Bonds had little reaction to the 1:00 PM ET results, preventing the sale from affecting mortgage pricing. We will repeat this process tomorrow when 7-year Notes are sold.



Gross Domestic Product (GDP)

Tomorrow brings a major release with the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This index is considered to be the benchmark indicator of economic growth or weakness. It is the total of all goods and services that are produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important report we get regularly. Current forecasts are estimating that the economy grew at an annual rate of 8.2% during the April through June months. A stronger GDP number would be bad news for bonds and rates since it would mean the economy was stronger than thought.



Weekly Unemployment Claims (every Thursday)

Also early tomorrow morning will be the release of last week’s unemployment figures. They are expected to show that 380,000 new claims for unemployment benefits were filed last week, down from the previous week’s 419,000. Declining claims from week to week indicate a strengthening employment sector. Accordingly, good news for bonds and mortgage rates will be a higher number. bond market is currently down 6/32 (1.25%), but we still should see little change in this morning’s 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.