Rate Lock Advisory

Wednesday, September 30th

Wednesday’s bond market has opened in negative territory following stronger than expected economic data and early stock gains. Stocks are rallying with the Dow up 356 points and the Nasdaq up 115 points. The bond market is currently down 8/32 (0.68%), but gains from yesterday afternoon should keep this morning’s mortgage rates close to Tuesday’s early pricing. If you saw an intraday improvement in rates during afternoon trading yesterday, you likely will see an increase in this morning’s pricing.



30 yr - 0.67%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



ADP Employment

September's ADP Employment report was posted at 8:15 AM ET, showing 749,000 private sector jobs were added back to the economy this month. This was much higher than the 625,000 that was expected, hinting at stronger than thought employment sector growth. That is a sign of economic strength, making the data unfavorable for bonds and mortgage rates.



GDP Rev 2 (month after Rev 1)

Also released this morning was the second revision to the 2nd Quarter Gross Domestic Product (GDP) reading. It indicated the economy contracted at an annual rate of 31.4% during the April through June months. This was a slight upward revision from the previous estimate of 31.7%, but because the data is aged at this point and the revisions was minor, we have not seen a reaction to the news.



Weekly Unemployment Claims (every Thursday)

Tomorrow morning brings us the release of three economic reports that may influence mortgage rates. The first is last week’s unemployment update at 8:30 AM that is expected to show 850,000 new claims for unemployment benefits were filed last week, down from the previous week’s 870,000 initial filings. Rising claims is a sign that the employment sector is weakening, not getting stronger. Therefore, the higher the number of new flings, the better the news it is for mortgage rates.



Personal Income and Outlays

The second report of the day will be August's Personal Income and Outlays at 8:30 AM. It gives us an indication of consumer ability to spend and current spending habits. This is relevant to the markets because consumer spending makes up such a large part of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. That is negative news for mortgage rates because bonds tend to thrive in weaker economic conditions. It is expected to show a decline of 2.2% in income and a 0.7% rise in spending. If we see weaker than expected readings, the bond market should react positively, leading to lower mortgage rates tomorrow. This report also includes the PCE index that the Fed primarily uses for gauging inflation. A surprise in it can also lead to a move in mortgage pricing.



ISM Index (Institute for Supply Management)

Even more important than the other two is the release of the Institute for Supply Management’s (ISM) September manufacturing index at 10:00 AM ET. This index is highly important because it measures manufacturer sentiment, giving us an indication of manufacturing sector strength. It is the first report each month that tracks the preceding month's activity. Tomorrow’s release is expected to show a September reading of 56.0, indicating that manufacturer sentiment held steady from August's reading. A smaller than expected reading would be good news for bonds and likely lead to lower mortgage 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.