Rate Lock Advisory

Thursday, July 2nd

Thursday’s bond market has opened well in positive territory following this morning’s key economic release. The stock markets are showing modest gains with the Dow up 33 points and the Nasdaq up 1 point. The bond market is currently up 15/32 (2.37%), but due to weakness yesterday afternoon this morning’s improvement in mortgage rates will likely be limited to approximately .125 of a discount point if comparing to Wednesday’s morning pricing.

15/32


Bonds


30 yr - 2.37%

33


Dow


17,791

1


NASDAQ


5,013

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Positive


Employment Situation

June’s Employment report was posted at 8:30 AM ET this morning, varying from its traditional Friday morning posting because of the holiday tomorrow. It showed that the U.S. unemployment rate slipped 0.2% to 5.3% while 223,000 new payrolls were added to the economy. The third headline number we watch is average hourly earnings that showed no change from May’s level. Analysts were expecting to see a 5.4% unemployment rate, 230,000 jobs and a 0.2% rise in earnings. Technically, the unemployment drop is bad news for bonds and mortgage rates but it is being attributed to a significant drop in people participating in the labor force. However, the weaker than expected payroll number and the fact that May’s and April’s job numbers were revised lower by a total of 60,000 jobs are favorable news. In addition, the weaker than forecasted earnings reading is preferred by bond traders. Therefore, we can consider this report good news for bonds and mortgage rates.

Medium


Positive


Factory Orders

Today’s second report was May's Factory Orders at 10:00 AM ET. It showed that new orders for durable and non-durable goods fell 1.0% when analysts were expecting to see a 0.5% decline. Because this data points towards manufacturing sector weakness and bonds tend to thrive in weaker economic conditions, we can also consider it good news for mortgage rates. Unfortunately, it does not carry nearly the significance that the Employment report does, so its impact on today’s rates has been minimal.

---


Unknown


None

The U.S. financial and mortgage markets will be closed tomorrow in observance of the Independence Day holiday and will reopen for regular trading Monday morning. Next week has little in terms of scheduled reports that may affect mortgage rates. There are two Treasury auctions that have a decent chance of influencing rates and a batch of public speaking engagements by current Fed members that may do the same. But if wishing for economic data to drive rates lower, next week is not hopeful. We also have the Greek referendum/financial crisis to watch over the weekend that can heavily impact trading and rates next week. Look for details on next week’s calendar in Sunday evening’s weekly preview. Due to market closings tomorrow, there will be no update to this report.

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.