Rate Lock Advisory

Thursday, June 30th

Thursday’s bond market has opened in positive territory following favorable economic data and early selling in stocks. The major stock indexes are posting sizable losses of 593 points in the Dow and 313 points in the Nasdaq. The bond market is currently up 16/32 (3.03%), which with gains late yesterday should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point if compared to Wednesday’s early pricing.



30 yr - 3.03%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Personal Income and Outlays

We had two pieces of data posted this morning, one of which was much more important to the markets than the other. First was May’s Personal Income and Outlays data at 8:30 AM ET that showed a 0.5% rise in income and a 0.2% increase in spending. The income reading pegged forecasts, but spending fell short of the 0.5% rise that was expected. Since softer spending usually translates into slower economic growth, we can consider that portion of the report as favorable for bonds and mortgage rates.



Personal Income and Outlays

Another reading in the report is the core PCE index that the Fed uses as an inflation gauge. It rose 0.3% when analysts were predicting 0.4%. The softer than thought inflation reading is also good news for bonds and mortgage rates, helping to fuel this morning’s bond gains.



Weekly Unemployment Claims (every Thursday)

Today’s second report drew much less attention than the first. It was last week’s unemployment figures that revealed 231,000 new claims for unemployment benefits were filed last week. This was a slight decline from the previous week’s upwardly revised 233,000 initial filings. It was not enough of a change to makes this release relevant to today’s mortgage rates.



ISM Index (Institute for Supply Management)

Tomorrow brings us an important manufacturing index and an early close for the bond market. The data will come from the Institute of Supply Management (ISM), who will post their manufacturing index for June at 10:00 AM ET. This index measures manufacturer sentiment by surveying trade executives on current business conditions. May's reading that was posted last month came in at 56.1. Market participants are expecting a reading of 55.0, indicating weaker activity in the manufacturing sector. Good news for the bond market and mortgage rates would be a lower reading. This is a very important report and is watched closely, partly because it is the first piece of data that tracks the previous month's activity each month. We can expect to see the bond market react to a surprisingly strong or weak number.



Holiday Schedule

Also worth noting is the bond market will close at 2:00 PM ET tomorrow ahead of Monday's Independence Day holiday closure and will reopen for regular trading next Tuesday morning. Stocks will trade a full day tomorrow but be closed Monday also. The pre-holiday early close sometimes creates pressure in the bond market as traders look to protect themselves while U.S. markets are closed for the extended weekend. It shouldn’t be a major influence on rates though. If it does come into play, the impact should be minor on tomorrow’s mortgage pricing.

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.