Daily Mortgage Rate Lock Advisory

Tuesday’s bond market has opened in positive territory despite the release of stronger than expected economic news. The stock markets are showing losses with the Dow down 38 points and the Nasdaq down 6 points. The bond market is currently up 5/32, but we likely will see little change in this morning’s mortgage rates due to some weakness late yesterday.

The Institute of Supply Management (ISM) reported late this morning that their manufacturing index for June rose from 49.6 in May to 50.2 in June. Analysts were expecting to see a decline in the index with a reading of 48.6. This means that manufacturer sentiment was stronger than thought. This is actually considered to be negative news for bonds and mortgage rates, however, the market seems to be geared towards oil and stock prices today.

The Commerce Department will post May’s Factory Orders data late tomorrow morning, which is similar to the Durable Goods Orders report that was released last week. The biggest difference being that tomorrow’s report covers both durable and non-durable goods. It usually doesn’t have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies from forecasts. Current expectations are showing a 0.5% rise in new orders from April’s levels. A smaller than expected rise in orders would be considered good news for the bond market and should help lower mortgage rates slightly tomorrow.

I would not be surprised to see some volatility in bonds and possibly mortgage rates later today and tomorrow. Accordingly, it may be wise to lock an interest rate if closing in the immediate future if you are still floating. This volatility, if it does come, could improve mortgage rates or lead to upward revisions. I am not so certain that they will be favorable to mortgage shoppers, hence the lock recommendation. This doesn’t mean that I am sure rates will move higher over the next day or so. It simply means that the likelihood of seeing much of an improvement during that time frame is outweighed by the potential risk of a spike in rates. Maintaining fairly constant contact with your mortgage professional is recommended for the next few days.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float 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.

Monday’s bond market has opened that week flat as have the stock markets. The Dow is currently up 3 points while the Nasdaq is nearly unchanged from Friday’s close. The bond market is also nearly unchanged, but due to strength in bonds late Friday we should see an improvement in today’s mortgage rates of approximately .375 of a discount point.

This week brings us the release of very few economic reports for the markets to digest. There are only three monthly reports scheduled for release that are likely to affect mortgage rates, but one of them is arguably the most influential single piece of data that we see each month. This is a shortened trading week with the markets closed Friday and an early bond market close Thursday in observance of the Independence Day holiday.

The first of the week’s three reports is of fairly high importance to the bond market. The Institute of Supply Management (ISM) will release their manufacturing index for June late tomorrow morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading below 50 means that more surveyed executives felt business improved than those who felt it had worsened. Analysts are expecting to see a reading of approximately 48.6, meaning that sentiment fell from May’s level. That would be considered good news for bonds and mortgage rates.

Overall, I am expecting to see the most movement in rates the latter part of the week. Tomorrow morning should bring some volatility with the ISM index, but Thursday’s Employment report is definitely the most important of the week and can single handily lead to an improvement or increase in mortgage rates for the week.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 6 0 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.

This week brings us the release of very few economic reports for the markets to digest. There are only three monthly reports scheduled for release that are likely to affect mortgage rates, but one of them is arguably the most influential single piece of data that we see each month. This is a shortened trading week with the markets closed Friday and an early bond market close Thursday in observance of the Independence Day holiday.

The first of the week’s three reports is of fairly high importance to the bond market. The Institute of Supply Management (ISM) will release their manufacturing index for June late Tuesday morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading below 50 means that more surveyed executives felt business improved than those who felt it had worsened. Analysts are expecting another reading below 50.0. That would indicate that manufacturers felt business remained close to unchanged from the previous month. Good news would be a weaker than expected reading.

The Commerce Department post May’s Factory Orders data late Wednesday morning, which is similar to the Durable Goods Orders report that was released last week. The biggest difference being that this week’s report covers both durable and non-durable goods. It usually doesn’t have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies from forecasts. Current expectations are showing a 0.6% rise in new orders from April’s levels. A smaller than expected rise in orders would be considered good news for the bond market and should help lower mortgage rates slightly Wednesday.

The only other important release of the week comes early Thursday morning. The Labor Department will give us June’s unemployment rate, number of new payrolls added and average hourly earnings. These are considered to be very impo rtant readings of the employment sector and can have a huge impact on the financial markets.

The ideal scenario for the bond market is rising unemployment, a decline in payrolls and no change in earnings. Weaker than expected readings should help boost bond prices and lower mortgage rates. However, stronger than forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see the unemployment rate to slip 0.1% to 5.4%, while 50,000 jobs were lost and a 0.3% rise in earnings.

Overall, I am expecting to see the most movement in rates the latter part of the week. Tuesday morning should bring some volatility with the ISM index, but Thursday’s report is definitely the most important of the week and can single handily lead to an improvement or increase in mortgage rates for the week.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float 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.