Our Team Marvin Bush, Sales Associate/Team Leader DRE 01729105 Michelle Garcia, Sales Associate DRE 02101807

Rate Lock Advisory

Thursday, July 23th

Thursday’s bond market has opened well in negative territory, mostly due to Middle East news that appears to mean the conflict has expanded beyond Iran and the Strait of Hormuz. Stocks are responding to the same headlines, pushing the Dow lower by 472 points and the Nasdaq down 499 points. The bond market is currently down 12/32 (4.71%), which should cause an increase of approximately .375 - .500 of a discount point in this morning’s mortgage rates if compared to Wednesday’s early pricing.

12/32

Bonds

30 yr - 4.71%

472

Dow

51,746

499

NASDAQ

25,191

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Neutral

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

Yesterday’s 20-year Treasury Bond auction didn’t go as well as we had hoped. The benchmarks showed a weaker demand from investors than the previous sale of the same securities and slightly below the average of the most recent ten sales. We did see bond yields move a bit higher after results were announced at 1:00 PM ET, but it wasn’t enough of a change for most lenders to issue an intraday revision to mortgage rates. Accordingly, we are labeling the sale neutral to slightly negative for rates.

Medium

Negative

Weekly Unemployment Claims (every Thursday)

Today’s only economic data was last week’s unemployment figures that revealed new claims for jobless benefits dropped to 187,000. This was noticeably lower than the 213,000 that was expected and a decline from the previous week’s revised 209,000 initial filings. The decline is a sign that the employment sector strengthened last week, making it bad news for bonds and mortgage pricing. That said, this report is not the cause of this morning’s weakness in the bond market and increase in mortgage rates.

High

Negative

Iran War Headlines

What is driving this morning’s trading is news from the Middle East that the Iran-backed Houthis group attacked oil ships in the Red Sea. This is a clear sign that the conflict is escalating and may continue to expand, which has oil prices topping $100 a barrel for the first time in two months. Higher oil costs lead to higher gas prices at the pump and spreads to other energy products that causes prices to increase for businesses and consumers. In other words, higher oil prices fuel inflation that hurts bonds prices and leads to higher yields.

High

Negative

General Bond Trends

It is worth noting that this morning’s bond selling has the benchmark 10-year Treasury Note yield at its highest level of the year and breaking a level that was previously set in January of last year. We now have to go back to October of 2023 to find where the 10-year yield was higher. This is bad news for mortgage shoppers because mortgage rates almost always track the direction of bond yields. It will be interesting to see what the few days bring in terms of geopolitical news that will affect bonds and mortgage pricing.

Low

Unknown

New Home Sales

This week’s light economic calendar comes to a close late tomorrow morning when June's New Home Sales report will be released. This report gives us a little insight into the housing sector, but only covers sales of newly constructed homes instead of resales. These transactions make up such a small portion of all sales in the U.S. that the report usually doesn't have much of an impact on mortgage pricing. Forecasts have sales rising, hinting at housing strength. An unexpected decline would technically be favorable for bonds and mortgage rates, but we are not expecting to see a noticeable move in rates due to this data. Bond traders are much more focused on inflation and Middle East news than this data.

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.

The Bush Team @ Miramar International DRE 01357148

3400 Calloway Drive #700
BAKERSFIELD, CA 93312
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