Rate Lock Advisory

Thursday, October 1st

Thursday’s bond market has opened in negative territory again, extending the negative tone from yesterday. Stocks are showing moderate gains with the Dow up 11 points and the Nasdaq up 83 points. The bond market is currently down 4/32 (0.69%), which with weakness late yesterday should cause an increase in this morning’s mortgage rates of approximately .125 of a discount point.



30 yr - 0.69%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update that was posted at 8:30 AM ET showed 837,000 new claims for unemployment benefits were filed last week. This was down from the previous week’s revised 873,000 initial filings and lower than the 850,000 that was expected. Those numbers mean the employment sector was a bit stronger than expected last week, making the data bad news for bonds and mortgage rates even though they still indicate serious weakness in the sector.



Personal Income and Outlays

Also posted at 8:30 AM ET was August's Personal Income and Outlays report. It showed that income fell 2.7% last month while spending rose 1.0%. The decline in income was larger than expected but the spending was stronger than forecasts. Those are mixed readings for the bond market and mortgage rates. The monthly PCE index that tracks inflationary pressures matched expectations.



ISM Index (Institute for Supply Management)

The final report of the day was the highly important Institute for Supply Management’s (ISM) manufacturing index for September at 10:00 AM ET. It came in at 55.4, falling short of August’s 56.0 that was expected for September also. The decline means fewer surveyed manufacturing executives felt business improved than did in August. Since that is a sign of a slowing manufacturing sector, we can consider the news slightly favorable for rates. Unfortunately, it was not enough of a surprise to cause much of a reaction in the bond or mortgage markets.



Employment Situation

Tomorrow has three reports scheduled for release, but one of them is likely take centerstage and drive mortgage rate movement much more than the others. That will be September's Employment report at 8:30 AM. This report is comprised of many statistics and readings on the employment situation, but the most important are the unemployment rate, the number of new jobs added or lost during the month and average hourly earnings. Current forecasts call for the unemployment rate to slip 0.2% to 8.2%, an increase in payrolls of approximately 850,000 and a 0.2% increase in average earnings. Weaker than expected readings should rally bonds enough to improve mortgage rates, especially if the stock markets react poorly to the news.



Factory Orders

August's Factory Orders data will be released at 10:00 AM ET tomorrow. This Commerce Department report is similar to last Friday's Durable Goods Orders release except it includes orders for both durable and non-durable goods. It is expected to show a 1.3% rise in new orders. A smaller increase would be good news for the bond market and mortgage rates while a larger rise would be bad news. Due to the importance of the Employment report, it is highly unlikely that this release will have an impact on mortgage pricing.



University of Michigan Consumer Sentiment (Rev)

The final report of the day will be the University of Michigan's revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed a 78.9 reading. Analysts are expecting to see no change, meaning consumer confidence was as strong as previously thought. Waning confidence is good news for bonds because consumers that are concerned about their own financial and employment situations are less likely to make a large purchase in the near future, limiting economic growth. Therefore, a lower than expected reading would be favorable news for rates.

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.