Rate Lock Advisory

Thursday, April 3rd

Thursday’s bond market has opened well in positive territory as the markets react strongly to yesterday’s tariff news. Stocks are tanking with the Dow down a whopping 1,482 points and the Nasdaq down 824 points. The bond market is currently up 27/32 (4.02%), which should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point if compared to Wednesday’s early pricing. Weakness in bonds late yesterday caused some lenders to issue an intraday upward revision in rates. If you did see an intraday increase you should see a larger improvement this morning.

27/32

Bonds

30 yr - 4.02%

1,482

Dow

40,742

824

NASDAQ

16,776

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM
Created with Raphaël 2.1.22.37%3.0125%3.6550000000000002%4.2975%4.94%12/15/20188/2/20183/25/201811/9/20177/3/20173/2/201710/18/20166/5/20162/5/20169/29/20155/17/20152/4/2015
National Average
1/1/2019
30 Year Fixed: 4.55%
15 Year Fixed: 4.01%
5/1 ARM: 2.76%

Indexes Affecting Rate Lock

Medium

Negative

Weekly Unemployment Claims (every Thursday)

This morning’s economic releases almost seem irrelevant when considering the size of this morning’s move in the markets and the cause of it. We got last week’s unemployment figures at 8:30 AM ET this morning. They revealed 219,000 new claims for jobless benefits were made last week. This was a decline from the previous week’s revised 225,000 initial filings and below forecasts of 226,000. The lower number of claims is a sign of strength in the employment sector, making the data unfavorable for mortgage rates. However, we saw practically no reaction to the headline because traders are almost entirely focused on the potential issues the tariffs may cause in the economy.

Medium

Positive

ISM Service Index

Today’s second release came at 10:00 AM ET when the Institute for Supply Management (ISM) announced their March non-manufacturing index (aka service index) stood at 50.8. That was much lower than expectations of 53.2 and down from February’s revised 53.0, indicating business conditions in the service sector softened last month. As another sign of weakness in the economy, we can label this report good news for rates even though it wasn’t needed for this morning’s rally.

Medium

Unknown

Fed Talk

There are two Fed speeches happening today that are relevant, but unlikely to alter today’s trading. One is scheduled for 12:30 PM ET and the other at 2:30 PM ET. Both have topics related to the outlook of the economy, meaning they have the potential to draw a reaction. However, the likelihood of something being said to reverse this morning’s bond rally is minimal.

High

Unknown

Employment Situation

As if we don’t already have enough volatility this week, we may see more tomorrow when March’s governmental Employment report is posted at 8:30 AM ET. Some of the important readings it will give us are the unemployment rate, the number of new jobs added or lost during the month and the average hourly earnings change. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a much smaller payroll number than expected and little or no increase in earnings. Current forecasts are calling for no change from February's unemployment rate of 4.1%, approximately 130,000 new jobs added to the economy and a 0.3% rise in earnings. Stronger than expected readings will likely fuel selling in bonds that could erase some or all of this morning’s improvement in rates. On the other hand, disappointing numbers should lead to lower mortgage rates tomorrow.

High

Unknown

Fed Talk

Furthermore, Fed Chairman Powell is set to speak at a conference in Virginia at 11:25 AM ET tomorrow. Whenever the Fed Chair speaks, the markets listen. He will also be speaking about the economy, raising the possibility of seeing a midday change in rates after the morning pricing is issued tomorrow.

Float / Lock Recommendation

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.