Rate Lock Advisory

Thursday, January 8th

Thursday’s bond market has opened in negative territory, following suit of overseas markets. Stocks are mixed again with the Dow up 92 points and the Nasdaq down 219 points. The bond market is currently down 6/32 (4.17%), which should cause an increase in this morning’s mortgage rates of approximately .125 - .250 of a discount point.

6/32

Bonds

30 yr - 4.17%

92

Dow

49,088

219

NASDAQ

23,365

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures that were posted at 8:30 AM ET this morning revealed 208,000 new claims for benefits were filed. This was an increase from the previous week’s revised 200,000 initial filings and slightly lower than the 210,000 that was expected. Since last week’s number of new claims was higher than the previous week, we can label the report good news for bonds and mortgage rates.

Low

Positive

Productivity and Costs (Quarterly)

Also released early this morning were 3rd Quarter Productivity numbers. They showed worker output rose at a 4.9% annual rate during the July through August months. This was a stronger pace than the 2nd quarter’s revised 4.1% and better than forecasts. A secondary reading in the data that is related to inflation via labor costs came in much softer than expected. While both readings are considered favorable for bonds and mortgage rates, we haven’t seen a reaction to the news unfortunately. The overnight selling is stronger than the importance this aged data carries in the markets.

High

Unknown

Employment Situation

Tomorrow has a couple economic reports set for release, including the almighty monthly Employment report at 8:30 AM ET. This will be the first timely release of the report since the shutdown ended, covering December. It will give us statistics such as the U.S. unemployment rate, number of jobs added (or lost) during the month and average hourly earnings readings. Rising unemployment, a decline in payrolls and flat earnings would be ideal news for the bond market. Analysts are expecting to see the unemployment rate slip 0.1% from November's four-year high of 4.6%, while 55,000 new jobs were added to the economy and an increase in earnings of 0.3%. If we see weaker than expected results, the bond market should rally, improving mortgage rates noticeably. However, stronger than expected readings may cause mortgage rates to spike higher tomorrow.

Low

Unknown

Housing Starts (New Home Construction)

October and September’s combined Housing Starts report is tomorrow’s second release of the day. It will tell us how many new home groundbreakings took place during those months. While this data gives us a small indication of housing sector strength, it usually has a minor impact on mortgage rates and should be minimized even further due to the age of the data. Accordingly, we shouldn’t expect the report to affect mortgage rates tomorrow.

Medium

Unknown

Univ of Mich Consumer Sentiment (Prelim)

January's preliminary reading to the University of Michigan's Index of Consumer Sentiment will finish this week's calendar at 10:00 AM tomorrow. It helps predict consumer willingness to spend. By theory, if consumers feel better about their own financial and employment situations, they are more apt to make a large purchase in the near future. Stronger consumer spending numbers translate into economic growth that makes stocks more appealing and bonds less attractive to investors. Current predictions show a minor increase from December's 52.9. The lower the reading, the better the news for bonds and mortgage rates.

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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