Rate Lock Advisory

Thursday, December 5th

Thursday’s bond market has opened in negative territory, practically erasing what was left of the bond rally early this week. Stocks are showing early losses with the Dow down 47 points and the Nasdaq down 11 points. The bond market is currently down 8/32 (1.80%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.



30 yr - 1.80%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Factory Orders

The Commerce Department gave us this morning’s sole monthly economic report with the release of October’s Factory Orders at 10:00 AM ET. It revealed a 0.3% rise in new orders at U.S. factories, matching expectations. This was a minor increase in a moderately important report that showed no surprises. Therefore, we can consider the results neutral for the bond market and mortgage rates. It is not the reason for this morning’s bump in mortgage pricing.



Geopolitical/Financial Issues

It seems the bond market may be reacting more trade news than any domestic economic data. There were tidbits of optimistic information and quotes overnight and early morning regarding the potential China trade deal. They are leading some traders to believe the first part of the deal will be made before the next round of U.S.-imposed tariffs on Chinese goods go into effect December 15th. The markets have been very reactive to any rumors or quotes on the subject. Since a trade deal would likely end or significantly reduce the tariffs that are believed to be restricting our economy, the comments are having a negative impact on bonds and mortgage rates this morning. As we have seen many times during this trade war though, we could get news or a tweet at any time that raises doubt that an agreement will be made soon.



Employment Situation

Tomorrow has two reports scheduled, one of which is a major piece of data that often heavily influences the markets. That will be November's Employment report at 8:30 AM ET. This is arguably the most important monthly report we see, so its impact on the markets and mortgage rates is often significant. It is comprised of many statistics and readings, but the most watched are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for no change in the unemployment rate of 3.6% while 180,000 new jobs were added to the economy. The income reading is forecasted to show an increase of 0.3%. An ideal scenario for mortgage shoppers would be a higher unemployment rate, a much smaller increase in payrolls (or a decline) and no change in the earnings reading. If we hit the trifecta with all three, we should see bond prices rise and mortgage rates move noticeably lower tomorrow. However, stronger than expected readings may fuel bond selling that would lead to higher mortgage rates.



University of Michigan Consumer Sentiment (Prelim)

The final report of the week is the release of December's preliminary reading to the University of Michigan's Index of Consumer Sentiment at 10:00 AM ET tomorrow. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Tomorrow's release is expected to show a reading of 96.5, which would be a slight decline from last month's final reading of 96.8. A large decline in confidence would be favorable news. However, the Employment report will be the center of attention as it carries much more importance in the markets.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.