Daily Mortgage Rate Lock Advisory

Thursday’s bond market has opened in negative territory after this morning’s GDP reading fueled a stock rally. The stock markets are showing gains with the Dow up 143 points and the Nasdaq up 19 points. The bond market is currently down 5/32, but we will still see an improvement in this morning’s mortgage rates of approximately .125 of a discount point due to strength in bonds late yesterday.

Today’s update to the 2nd Quarter Gross Domestic Product (GDP) reading revealed a higher level of growth than what was expected. Last month’s preliminary reading revealed a 1.9% pace, but today’s revision showed a 3.3% annual rate. Analysts were expecting to see a 2.7% rate, meaning that the economy grew at a rate that was faster than what analysts had forecasted. That is bad news for bonds because it raises inflation concerns that drive bond prices lower.

The Labor Department said that 425,000 new claims for unemployment benefits were filed last week. This was the third straight week that new claims have dropped, but analysts were expecting to see this number.

There are two pieces of economic data scheduled for release tomorrow. The first is July’s Personal Income and Outlays and the second is the University of Michigan’s Index of Consumer Sentiment. The income and spending data measures consumer ability to spend and current spending habits. It is expected to show a decline of 0.2% in income and a 0.2% increase in spending. Weaker than expected numbers would be good news for the bond market and mortgage rates.

August’s revision to the University of Michigan’s Index of Consumer Sentiment is the second. It gives us a measurement of consumer willingness to spend. It is expected to show an upward revision from August’s preliminary reading of 61.7. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates.

Also worth noting is that the bond market will close at 2:00 PM ET tomorrow ahead of the Labor Day holiday. It will remain closed Monday and reopen Tuesday morning. The stock markets will be closed Monday also. This may create a little more volatility during afternoon hours as traders prepare for the long weekend. However, I don’t think it will affect mortgage pricing.

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.