Rate Lock Advisory

Friday, December 4th

Friday’s bond market has opened well in negative territory despite some favorable headlines in this morning’s major economic report. Stocks are reacting to the same data, pushing the Dow up 96 points and the Nasdaq up 50 points. The bond market is currently down 19/32 (0.97%), which should cause this morning’s mortgage rates to be approximately .125 of a discount point higher than Thursday’s morning pricing.



30 yr - 0.97%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Employment Situation

Today’s big economic release was November’s Employment report at 8:30 AM ET that gave us mixed results on the employment sector. It showed that the unemployment rate fell from 6.9% to 6.7% while only 245,000 jobs were added back to the economy, continuing the trend of a slowing rebound in jobs. This was the lowest payroll number since before the pandemic started and the unemployment rate is still well above the 3.8% before the shutdown.



Employment Situation

A bit of negative news for the bond market was the stronger than expected 0.3% increase in average earnings when it was expected to increase 0.1%. Rising wages is an inflation concern that makes bonds less appealing to investors. It is possible that this reading may be contributing to this morning’s bond selling, but not likely to be the biggest force.



Economic Stimulus News

What seems to be hurting bonds the most during early trading is optimism in the markets that another stimulus package may be coming sooner than later. There were already rumors of some common ground between Republicans and Democrats in Washington, indicating they are inching towards an agreement. Then came this morning’s Employment report that showed employment growth is still slowing. This report will likely be used to force Congress into a compromise to support businesses and the economy as the rebound is clearly running out of steam. That is a topic we addressed previously when talk of another stimulus package made headlines. It will be the bond market that will be used to fund a good part of the package if not most of it, meaning the government will need to sell even more bonds in the near future. The additional supply will make current securities less appealing to investors, driving yields and mortgage rates higher.



Factory Orders

October's Factory Orders report was also posted this morning but was a non-factor because of the importance of the earlier release. It revealed that new orders at U.S. factories rose 1.0%, exceeding forecasts of a 0.8%. The larger increase hints at a stronger manufacturing sector, making it technically bad news for mortgage rates even though it has not affected rates this morning.




Next week has a handful of relevant economic releases scheduled that may influence mortgage rates. There is nothing set for Monday, but at least one item is coming every other day. The week also includes two Treasury auctions that sometimes have an impact on rates. The most important events will take place the latter days. Look for details on all of next week’s calendar in Sunday evening’s weekly preview.

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.

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