Rate Lock Advisory

Wednesday, May 6th

Wednesday’s bond market has opened well in positive territory due to overnight Iran news. Stocks are rallying on the same headlines, pushing the Dow higher by 574 points and the Nasdaq up 247 points. The bond market is currently up 16/32 (4.36%), which should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point.

16/32

Bonds

30 yr - 4.36%

574

Dow

49,873

247

NASDAQ

25,573

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

ADP Employment

This morning’s sole relevant economic data was April’s ADP private-sector Employment report at 8:15 AM ET. The payroll processor announced 109,000 new private-sector jobs were added to the economy last month. This was higher than forecasts and hints that the employment sector may be stronger than thought. Accordingly, we have to label the report bad news for bonds and mortgage rates even though it hasn’t had an obvious impact on this morning’s pricing.

High

Positive

Iran War Headlines

Today’s early bond strength does not come as a result of the ADP report. Bonds were rallying well before the data was released and the report gave us unfavorable results. What seems to be driving trading this morning are rumors that Iran and the U.S. are getting close to a peace plan. Whether or not that turns out to be accurate is another thing. We have seen many times over the past two plus months that what one side says publicly isn’t what the other side thinks. Therefore, let’s enjoy this morning’s rally, but don’t be surprised to see an about-face later today if something happens or is said that contradicts the peace rumor fueling this morning’s gains.

Medium

Unknown

Productivity and Costs (Quarterly)

Tomorrow brings us the release of two moderately important economic reports, both at 8:30 AM ET. One will be 1st Quarter Productivity and Costs data that helps us measure employee productivity in the workplace. High levels of productivity allow for low-inflationary economic growth. This update will likely be a non-factor for rates unless it shows a significant variance from forecasts. Productivity is expected to have improved 1.7% while labor costs reading rose 2.6%. Good news for mortgage pricing would be a stronger rate of productivity and a smaller increase in labor costs.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

We will also get last week’s unemployment figures tomorrow morning. They are expected to show new claims for jobless benefits rose after the previous week’s surprise of 189,000 initial filings were the lowest since September 1969. This weekly update generally isn’t a market mover, but if tomorrow’s release shows another decline instead of an increase, we could see a fairly strong reaction in the bond market. Forecasts have a number around 205,000 in new claims. Good news for mortgage rates would be higher number, indicating the employment sector was weaker than thought last week.

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.

Amity Mortgage LLC

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