Rate Lock Advisory

Tuesday, October 3rd

Tuesday’s bond market has opened in negative territory again, extending overnight losses into this morning’s session. Stocks are in selling mode also, pushing the Dow lower by 242 points while the Nasdaq has lost 142 points. The bond market is currently down 16/32 (4.75%), which with weakness late yesterday should cause an increase of approximately .375 of a discount point in this morning’s mortgage pricing.



30 yr - 4.75%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



General Bond Trends

Today doesn’t have any economic data scheduled for release that we traditionally rely on to influence bond trading or mortgage pricing. This overall negative tone in bonds doesn’t seem to be letting up, pushing yields to their highest level since before the great financial meltdown. In the short-term, it would be wise to proceed cautiously if still floating an interest rate and closing soon. However, over the longer-term, there is a good chance yields (and mortgage rates) will eventually retrace some of this upward move, especially if stocks continue to slide.



ADP Employment

Tomorrow has several events taking place that we will be watching. First will be September's ADP Employment report at 8:15 AM ET. It has the potential to cause some movement in the markets if it shows much stronger or weaker numbers than forecasts. This report tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. However, it is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we have seen reactions to the report, we should be watching it. Analysts are expecting it to show that 150,000 new payrolls were added. Good news for mortgage rates would be a noticeably smaller increase.



ISM Service Index

Next up will be the ISM’s non-manufacturing index at 10:00 AM ET, also known as the services index. This index is the sister release of yesterday’s manufacturing index. Forecasts show 53.7 for September, down from August’s 54.5. Such a decline would mean fewer surveyed executives felt business improved last month in the service sector than did in August. As a sign of economic weakness, a larger decline would be favorable for bonds and mortgage rates. Keep in mind, Monday’s version came in much stronger than expected.



Factory Orders

August's Factory Orders data will close tomorrow’s economic releases at 10:00 AM ET. It is similar to last week's Durable Goods Orders release except this version includes orders for both durable and non-durable goods. Forecasts are calling for a 0.3% increase in new orders. A decline would be good news for the bond market and mortgage rates while a larger rise would be bad news. Since a good portion of the data was already released last week, it is unlikely that this report will have a noticeable impact on mortgage pricing.



Geopolitical/Financial Issues

Also worth noting about tomorrow is the OPEC meeting. This is where the 13 oil producing member nations set output quotas, directly impacting the global oil supply. Raising production quotas means there is more oil available in the marketplace and should lower gas and other energy costs, easing inflationary pressures-particularly at the pump. On the other hand, if they lower output, we will likely see crude oil prices rise that translate into higher fuel costs and more inflation fears that make bonds less attractive to investors. The latter would lead to higher 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.