Rate Lock Advisory

Sunday, June 4th

This week brings us very little that is expected to move mortgage rates. The only monthly economic reports are set for release tomorrow morning and neither of them are considered to be key reports. There are no Treasury auctions or Fed events to watch, not even Fed members speeches since they are in their pre-FOMC meeting quiet period. And with the debt-ceiling issue behind us, we find ourselves without much to look forward to this week.

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Bonds

Market Closed

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Dow

Market Closed

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NASDAQ

Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Unknown

Factory Orders

Both of tomorrow’s releases will be posted at 10:00 AM ET. One is April’s Factory Orders data that will give us a moderately important indication of manufacturing sector strength. A good-sized portion of this data was already announced in last week’s Durable Goods Orders release. Tomorrow’s version includes new orders for both durable and non-durable goods. It is expected to show a 0.8% rise in orders at U.S. factories. Good news for bonds and mortgage rates would be a decline in orders.

Medium

Unknown

ISM Service Index

The day’s second release will come from the Institute for Supply Management (ISM), who will post their services index for May. This is the sister release to last week’s ISM manufacturing index, but covers the service sector rather than manufacturing. It is expected to come in higher than April’s reading, hinting at growth in the sector. Since bonds tend to thrive in weaker economic conditions, a much lower reading than the predicted 52.3 would be favorable for rates. A stronger reading could lead to higher mortgage pricing tomorrow morning.

Medium

Negative

Geopolitical/Financial Issues

Other than the normal Thursday morning weekly unemployment update, there is no other relevant economic data set for release this week. Worth noting was word out of today’s OPEC+ meeting that Saudi Arabia is going to be reducing their oil output by 1 million barrels a day next month to help boost the price of each barrel. Lower supply generally leads to higher prices, which in turn raises the retail cost for energy products, such as the price we pay to fill our tanks at the pump. Higher fuel costs contribute to stronger inflation numbers and bonds usually suffer while mortgage rates rise during stronger inflationary periods. Accordingly, we may see negative bond reaction to this weekend’s news before we even get to the release of tomorrow’s economic data.

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Unknown

none

Overall, tomorrow may end up being the most active day for rates, something that rarely happens. The best candidate for the calmest day is practically any other day expect tomorrow. There is a good chance that the markets and mortgage rates will be much more stable than we have seen over the past few weeks, unless something unexpected happens. If closing soon and still floating an interest rate, it would be a good idea to keep an eye on the markets as they can get volatile without notice. However, it appears this week carries a much lower risk level for floating a rate than recent weeks.

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... Lock 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

Your friends in the mortgage business.

185 Meadow St
Naugatuck, CT 06770
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