Rate Lock Advisory

Friday, November 26th

Friday’s bond market has opened sharply higher following new COVID headlines over the holiday. Stocks are in a major sell-off as a result of the same news, pushing the Dow lower by 943 points and the Nasdaq down 258 points. The bond market is currently up 40/32 (1.50%), which should improve this morning’s mortgage rates by approximately .500 of a discount point if compared to Wednesday’s early pricing. The financial and mortgage markets were closed yesterday for the Thanksgiving holiday.



30 yr - 1.50%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



FOMC Meeting Minutes

Wednesday afternoon’s release of the minutes from this month’s FOMC meeting made it clear that the Fed is ready to take stronger action to control inflation than many had thought prior to reading them. They showed that some members feel that not only will they need to be more aggressive with bond tapering, but they may need to also start raising key short-term interest rates sooner than previously thought.



FOMC Meeting Minutes

The bond market actually responded positively after the minutes were posted. With inflation high and seeing the bond market react negatively to inflation-related data recently, some may wonder why that would be. The reason is quite simple. It is because the Fed and the bond market share a common preference- controlled inflation. Maximum employment and stable inflation/prices make up the Fed’s dual mandate and bonds are more attractive to investors when inflationary pressures are low. In other words, both the Fed and the bond market need inflation to remain under control. So, when the Fed is ready to act against that threat, it is actually good news for the bond market and mortgage rates in the long-term. We saw that theory drive trading Wednesday afternoon.



COVID-19 Matters

There is no relevant economic data being posted today. Causing this morning’s bond rally is news from Africa that there may be a new strain of COVID rapidly spreading that appears to be immune to current vaccinations. Fears of how quickly that would be able to spread as seasonal activities tend to head indoors, and the impact it could have on the global economy, has stocks in selling mode and bonds as a safe haven this morning. This issue will obviously be watched very carefully in the coming weeks.



Holiday Schedule

We will get an early close in the markets today with stocks set to close at 1:00 PM ET and bonds closing at 2:00 PM ET. The pandemic news is definitely worthy of a strong reaction in the markets, but there is a possibility that it is so strong because of the holiday schedule. Many traders are home for the long weekend, creating what we call thin trading, which allows larger moves to relevant events and news than we normally would see. In other words, don’t be surprised to see bonds give back some of this morning’s gains by the end of the shortened day or Monday morning. This is a good opportunity to lock an interest rate, especially if closing in the very near future.




Next week has a handful of economic reports scheduled for release, including some highly important data such as the ISM manufacturing index and the monthly Employment report. Monday has nothing of importance scheduled, but every other day has at least one item being posted. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

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.