Another Move For Rates 10-26-2017

By James Brooks

The bond market is down 10/32 (2.45%), which should push this morning?s mortgage rates higher by approximately .250 of a discount point if comparing to Tuesday?s early pricing. Many lenders revised rates upward late yesterday as bond selling picked up momentum. If your lender did revise rates intraday yesterday, you should see less of an increase in todaypricing.

September?s Durable Goods Orders report was posted at 8:30 AM ET this morning. The Commerce Department announced a 2.2% rise in new orders for big-ticket products such as airplanes and appliances. This was a larger rise than the 1.3% that was expected, indicating stronger manufacturing growth. A secondary reading that excludes more volatile and costly transportation-related orders, such as airplanes, was also stronger than anticipated (+0.7% vs 0.5%). Those figures make the data bad news for bonds and mortgage rates. However, bonds were already set for a weak opening before this report was released. This data isn?t the cause of today's selling, but has contributed to it.

Also posted today, but at 10:00 AM ET, was September's New Home Sales. It showed an 18.9% jump in sales of newly constructed homes last month. That was considerably stronger than predicted and pushed sales to their highest levels since October 2007. It was also the largest monthly gain since January 1992. The spike in sales indicates strength in the new home portion of the housing sector, meaning it was definitely bad news for bonds and mortgage rates.

Today also has the first of this week?s two Treasury auctions that may affect mortgage rates. Today has 5-year Notes being sold while 7-year Notes go tomorrow. If these sales are met with a strong demand from investors, bond prices may rise during afternoon trading. This could lead to improvements to mortgage rates shortly after the results of the sales are posted at 1:00 PM ET each day. But a lackluster investor interest may create selling in the broader bond market and lead to slight upward revisions to mortgage rates.

Tomorrow?s only relevant economic release is last week?s unemployment figures at 8:30 AM ET. They are expected to show that 235,000 new claims for unemployment benefits were filed last week, up from the previous week?s 222,000 initial claims. Since rising claims are a hint of a weakening employment sector, the higher the number the better the news it is for mortgage rates. However, because this is only a weekly report, it likely will have little impact on tomorrow?s mortgage rates unless it shows a significant variance.

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.

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