Rate Lock Advisory

Wednesday, May 31th

Wednesday’s bond market has opened in positive territory, extending yesterday’s debt-ceiling agreement another day. Stocks are in selling mode with the Dow down 223 points and the Nasdaq down 17 points. The bond market is currently up 12/32 (3.65%), which with gains late yesterday should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point from Tuesday’s early pricing. If you saw an intraday improvement yesterday, you should see a smaller change this morning.



30 yr - 3.65%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Fed Beige Book

Today’s only relevant economic information will come at 2:00 PM ET when the Federal Reserve releases their Beige Book report. It details economic conditions throughout the U.S. via business contacts in each Federal Reserve region and is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. Analysts are expecting to see weaker activity and more concerns about future growth since the previous update. If there is a reaction in the bond market or mortgage pricing, it will happen during mid-afternoon hours.



ADP Employment

There are three economic reports that may influence mortgage rates tomorrow, in addition to the weekly unemployment update. Starting the day’s releases will be May's ADP Employment report at 8:15 AM ET. It tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows later in the week. Forecasts show 160,000 private sector jobs were added to the economy during the month. The smaller the increase in jobs, the better the news it is for mortgage rates.



Productivity and Costs (Quarterly)

Next up will be revised 1st quarter Productivity and Costs data that measures employee output and employer costs for wages and benefits. This 8:30 AM release is also considered to be moderately important because it helps us measure wage inflation. Many analysts believe that the economy can grow with low inflationary pressures when productivity is high. Last month's preliminary reading revealed a 2.7% decline in productivity and a 6.3% jump in labor costs. Tomorrow’s update is predicted to show little change. Due to the age of this data now, it likely will not have a noticeable impact on tomorrow’s trading or mortgage pricing.



Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures will also be posted at 8:30 AM ET. Rising claims are a sign of employment sector weakness, so good news for rates would be a sizable increase from the previous week’s number. It is expected to show 233,000 new claims were made, up 4,000 from the previous week. Since this is only a weekly snapshot, it will take a wide variance from expectations for it to move rates.



ISM Index (Institute for Supply Management)

Closing tomorrow’s activities will be the release of the Institute for Supply Management's (ISM) May manufacturing index at 10:00 AM ET. This is one of the week’s highly important economic reports. A reading below 50 means that more surveyed manufacturing executives felt business weakened during the month than those who felt it had improved. Analysts are expecting to see a 47.1 reading in this month's release, unchanged from April. A lower reading will be good news for the bond market and mortgage shoppers while an increase could contribute to higher rates tomorrow.

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... 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.