Rate Lock Advisory

Thursday, July 30th

Thursday’s bond market has opened relatively flat even though the major economic release gave us somewhat favorable results. Stocks are showing fairly minor losses with the Dow down 50 points and the Nasdaq down 16 points. The bond market is up 1/32 (2.28%), which should keep this morning’s mortgage rates at yesterday’s early levels.



30 yr - 2.28%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Gross Domestic Product (GDP)

This morning had two pieces of economic data for the markets to digest. The first and more important one was the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It showed a 2.3% increase in the GDP from April through June that was a little softer than expectations. The data shows that the economy rebounded from a weak first quarter but at a slower pace than many had thought. Most forecasts were calling for an increase of 2.5% or higher. It appears that the markets weren’t overly impressed or concerned with the news as both stocks and bonds have shown minimal reaction. Still, we can consider the reading slightly favorable for bonds and mortgage rates.



Weekly Unemployment Claims (every Thursday)

The second report of the morning was last week’s unemployment figures that showed 267,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week’s 255,000 initial claims but was not as high as the 272,000 that was predicted. The good news is that the data indicates the employment sector weakened slightly last month. The not so good news is that it was still stronger than analysts thought. Therefore, we can consider the data neutral for mortgage rates.



Treasury Auctions (5,7,10,30 year securities)

There is a 7-year Treasury Note auction taking place today that may have a small impact on this afternoon’s mortgage rates. If the sale was met with a strong demand from investors, we could see the broader bond market improve enough to lead to a slight downward revision to mortgage rates. However, a weak interest in the securities could lead to a slight increase. Results of the sale will be posted at 1:00 PM ET, so any reaction will come during afternoon hours.



Employment Cost Index (Quarterly)

Tomorrow closes the week with two pieces of economic data that are sort of worth watching. The 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits is the first, coming at 8:30 AM ET. This gives us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. That would cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.6%.



University of Michigan Consumer Sentiment (Rev)

And July's University of Michigan Index of Consumer Sentiment just before 10:00 AM ET will wrap up the week’s activities. It will help us measure consumer optimism about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending that adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow's release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 93.3, I think the markets will probably shrug off this news.

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.