Rate Lock Advisory

Monday, May 11th

Monday’s bond market has opened in negative territory following Iran news. Stocks are mixed but mostly calm with the Dow down 2 points and the Nasdaq up 30 points. The bond market is currently down 9/32 (4.38%), which should push this morning’s mortgage rates higher by approximately .250 of a discount point if compared to Friday’s early pricing.

9/32

Bonds

30 yr - 4.38%

2

Dow

49,606

30

NASDAQ

26,277

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Neutral

Existing Home Sales from National Assoc of Realtors

The National Association of Realtors kicked-off this week’s calendar late this morning when they released their April Existing Home Sales report. It revealed a 0.2% increase in home resales to signal modest growth in the housing sector last month. This was close to expectations and hasn’t had an impact on this morning’s pricing, so we are labeling the report neutral for mortgage rates.

Medium

Negative

Iran War Headlines

News that President Trump is rejecting Iran’s peace proposal and the increase in oil prices that followed are fueling this morning’s bond weakness. This is another sign that despite what is said and reported in the media, the conflict isn’t likely to be resolved in the immediate future. Accordingly, the higher oil prices and lack of shipping traffic through the Strait of Hormuz are raising inflation concerns that make bonds less appealing to investors.

High

Unknown

None

Of the remaining four monthly economic reports set to be posted this week, three of them are major releases that have the potential to draw a very strong reaction in the markets. In addition to those reports, there are also two Treasury auctions of long-term debt that may influence mortgage rates during afternoon trading midweek. Iran war headlines and the upcoming US / China summit later in the week may also affect the markets enough to move mortgage rates.

High

Unknown

Consumer Price Index (CPI)

Next on the list will be the release of April's Consumer Price Index (CPI) at 8:30 AM ET tomorrow. This highly important report measures inflation at the consumer level of the economy. These results are watched closely because rising inflation makes long-term securities, such as mortgage-related bonds, less attractive to investors and causes the Fed to be reluctant to lower key short-term interest rates again. The overall reading is expected to be up 0.6% with gas prices still high, while the more important core reading that excludes volatile food and energy costs is expected to rise 0.4% for the month. Both are predicted to rise from March’s pace on an annual basis. Favorable news for bonds and mortgage rates will be readings that indicate inflation was softer than thought.

---

Unknown

none

Overall, tomorrow looks to be the most important day of the week for rates due to the influence the consumer inflation data has on the markets and the Federal Reserve. Wednesday and Thursday’s data also has the potential to draw a strong reaction and move mortgage pricing. Geopolitical headlines from the Middle East and the preliminary talks with China before the actual summit begins Thursday could cause some volatility in the markets any day. There are plenty of Fed speeches scheduled, but none of them appear to have a strong chance of affecting rates. With so much happening this week, it would be prudent to keep an eye on the markets if still floating an interest rate since they can get active without notice.

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.

Diamond Mortgage, LLC

14074 Trade Center Drive Suite 255
Fishers, IN 46038
Equal Housing Opportunity
Company NMLS ID: 115911 Individual NMLS ID: 129511
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