Rate Lock Advisory

Tuesday, August 4th

Tuesday’s bond market has opened in positive territory again due to more headlines that indicate progress in an Iran – U.S peace deal, causing oil prices to move lower. Stocks are also showing strong gains with the Dow up 601 points and the Nasdaq up 397 points. The bond market is currently up 10/32 (4.63%), which should improve this morning’s mortgage rates by approximately .250 of a discount point if compared to Monday’s early pricing.

10/32

Bonds

30 yr - 4.63%

601

Dow

53,779

397

NASDAQ

26,311

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Positive

Factory Orders

Today’s only relevant economic data came at 10:00 AM ET when June's Factory Orders report was posted. It revealed new orders at U.S. factories for durable and non-durable goods fell 0.3% when forecasts had them rising 0.3%. The unexpected decline is good news for bonds since it points to weakness in the manufacturing sector, but this data isn’t the cause of this morning’s improvement in rates. Bond were showing strength long before this data was released.

Medium

Unknown

ADP Employment

There are two pieces of economic data set for release tomorrow with both considered to be more influential than today’s data was. First will be the monthly ADP private-sector Employment report that comes from a non-governmental entity. The payroll processing company is expected to say 75,000 new private-sector payrolls were added to the economy last month. As with any employment data, this report will draw some attention. However, it is easy to argue that it is given more than it deserves, particularly because many unsuccessfully rely on it to predict the monthly government figures that will come Friday. Forecasts are calling for July to show 75,000 new private-sector payrolls. Good news for rates would be a much smaller number.

Medium

Unknown

ISM Service Index

The Institute for Supply Management's (ISM) non-manufacturing index (aka service index) for July will be posted tomorrow morning at 10:00 AM ET. This is the sister report of yesterday’s manufacturing index with this version tracking executive opinions on business conditions in the service sector rather than manufacturing. It is expected to show a reading of 54.4, up from June's 54.0. Readings above 50.0 mean more surveyed executives felt business improved during the month than those who said it worsened. A much weaker than predicted reading would be favorable for bonds and mortgage pricing.

Medium

Unknown

Fed Talk

Also worth noting about tomorrow is a speech by Fed Governor Lisa Cook at 4:05 PM ET. She will be speaking at a luncheon in Anchorage, Alaska with a topic listed as Economic Outlook. While she was not one of the three dissenting votes to keep key short-term rates unchanged at last week’s FOMC meeting, she has previously stated she is willing to vote for a rate hike if inflation doesn’t start retreating towards the Fed’s goal of a 2.0% annual rate. This leaves open the possibility of her making comments on the subject of when the Fed may need to raise key rates. Since this is a late afternoon event for the markets, we may not see a reaction until Thursday morning.

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.