Daily Mortgage Rate Lock Advisory

Rate Lock Advisory – Wednesday Dec. 3rd

Wednesday’s bond market has opened in negative territory despite the release of favorable economic news. The stock markets are in positive ground with the Dow up 87 points and the Nasdaq up 25 points. The bond market is currently down 17/32, which will likely push this morning’s mortgage pricing higher by approximately .250 of a discount point.

The revised reading to the 3rd Quarter Productivity report was posted this morning, showing an upward revision in productivity. What was previously estimated as a 1.1% rate was expected to be lowered to 0.9%. However, today’s release revealed a 1.3% annual rate, which means that workers were more productive than previously thought. That is considered good news for bonds and mortgage rates.

The Fed Beige Book will be released at 2:00 PM ET this afternoon. This report, which is named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so it results can influence bond trading and mortgage rates if it shows any significant surprises. I am expecting it to show significant signs of economic weakness and easing inflationary pressures. But, I believe the market has this news already built into it so the news may not lead to improvements in rates this afternoon.

Tomorrow’s only monthly report is October’s Factory Orders. This report is similar to last week’s Durable Goods Orders release except that this one includes orders for both durable and non-durable goods. This data usually isn’t a major influence on bond trading, but we may see it cause some movement in mortgage rates if it varies greatly from forecasts. Analysts are expecting to see a drop in orders of approximately 4.5%.

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… Lock 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.

Rate Lock Advisory – Tuesday Dec. 2nd

Tuesday’s bond market has opened in negative territory following a rebound in stock prices. The stock markets are bouncing off yesterday’s beating with the Dow up 250 points and the Nasdaq up 47 points. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

There is no relevant economic news scheduled for release today. It is the only day of the week that we will not get some type of relevant data. The next report that we need to be concerned with comes tomorrow morning with the release of the revised 3rd Quarter Productivity report. This index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn’t necessarily bad for the bond market. It is the cond itions around economic growth, such as inflation that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 0.9%, down from the previous estimate of 1.1%.

The Fed Beige Book will be posted tomorrow afternoon. This report, which is named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so it results can influence bond trading and mortgage rates if it shows any significant surprises.

The recent bond rally has driven bond prices higher and mortgage rates lower, however, I am concerned that we may see an increase in rates before they fall much further. The rally creates a situation where bond traders may sell holdings to capture profits from it. If there is a concern in the market whether bonds can improve much more, that move may happen sooner than later and can lead to a spike in mortgage rates. Therefore, I strong ly recommend that you maintain contact with your mortgage professional if still floating an interest rate because rate usually move higher much quicker than they improve.

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.

Rate Lock Advisory – Monday Dec. 1st

Monday’s bond market has opened strong following weaker then expected economic news and a major sell-off in stocks. The stock markets are kicking the month off in the tank with the Dow down almost 400 points and the Nasdaq down 81 points. The bond market is currently up 30/32, which will likely improve this morning’s mortgage rates by approximately .500 of a discount point.

The week’s first piece of economic news was November’s manufacturing index from the Institute for Supply Management (ISM) late this morning. It showed a reading of 36.2 that was below forecasts and is the lowest reading since May 1982. That indicates that manufacturer sentiment was weaker than many had thought last month. Since that hints at slower manufacturing activity it is good news for bonds and mortgage rates.

The recent rally in bonds has put us in uncharted waters in terms of their yields. The benchmark 10-Year Treasury Note is currently yielding 2.82%, which is it lo west on record. It broke below 3.00% last week for the first time since the Notes were issued in 1962. While mortgage rates have not recently plummeted as quickly as the yield has, they have fallen quite a ways and show signs of continuing to slide. The downside to that is the possibility of rates spiking higher at any moment. Bond yields and mortgage rates can worsen much quicker than they usually improve. Therefore, we need to remain extremely cautious during this rally as we could see an entire week’s worth of gains erased in a single morning if any of the major influences on bonds turns negative.

The next piece of data that we need to be concerned with comes Wednesday morning with the release of the revised 3rd Quarter Productivity report. This index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn’t necessarily bad for the bond market. It is the conditions around economic growth, such as inflation that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 0.9%, down from the previous estimate of 1.1%.

The Fed Beige Book will be posted Wednesday afternoon. This report, which is named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so it results can influence bond trading and mortgage rates if it shows any significant surprises.

Overall, the most important day of the week is Friday with the employment figures being released, but today will also likely be one of the more important. Tomorrow will probably be the lightest day of the week, assuming we don’t see another major sell-off or rally in stocks.

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.

Rate Lock Advisory – Sunday Nov. 30th

There are five pieces of economic news that may affect mortgage rates this week. There are relevant reports scheduled for release every day except for Tuesday, meaning it likely will be a fairly active week for mortgage rates.

November’s manufacturing index from the Institute for Supply Management (ISM) will kick off the week’s data at 10:00 AM ET tomorrow. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a decline in sentiment from October to November. October’s reading was previously announced as 38.9. A weaker reading than the expected 38.0 would be good news for the bond market and mortgage rates. A reading below 50 means that more surveyed trade executives felt business worsened during the month than those who felt it had improved. That is a recessionary sign and could help keep mortgage rates low.

The next piece of data that we need to be conce rned with comes Wednesday morning with the release of the revised 3rd Quarter Productivity report. This index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn’t necessarily bad for the bond market. It is the conditions around economic growth, such as inflation that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 0.9%, down from the previous estimate of 1.1%.

The Fed Beige Book will be posted Wednesday afternoon. This report, which is named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so it results can influence bond trading and mortgage rates if it shows any significant surprises.

Thursday’s only report of the day is October’s Factory Orders. This report is similar to last week’s Durable Goods Orders release except that this one includes orders for both durable and non-durable goods. This data usually isn’t a major influence on bond trading, but we may see it cause some movement in mortgage rates if it varies greatly from forecasts. Analysts are expecting to see a drop in orders of approximately 2.5%.
The Labor Department will post November’s Employment report early Friday morning. This is arguably the most important monthly report we see. It is comprised of many statistics and readings, but the most important ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for another upward change in the unemployment rate to 6.8%, payrolls down approximately 300,000 and an increase of 0.2% in average earnings. An ideal scenario for mortgage sho ppers would be a higher unemployment rate than 6.8%, a larger decline in jobs and no change in the earnings portion.

Overall, the most important day of the week is Friday with the employment figures being released, but we may also see movement in rates Monday and Wednesday. The remaining days could be fairly quiet, depending on stock market gains or losses. Friday’s data could cause a significant change in rates, but if it reveals stronger than expected results we may see rates spike higher Friday morning. Ahead of the report, we may see pressure in bonds as investors prepare for its release. Accordingly, I am holding the lock recommendations for short and intermediate-term periods.

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 pla ce 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.