Rate Lock Advisory

Friday, December 7th

Friday’s bond market has opened relatively flat following mixed results in today’s economic data. The major stock indexes look to be closing the week on a negative note with the Dow down 138 points and the Nasdaq down 68 points. The bond market is currently down 1/32 (2.88%), but weakness late yesterday should push this morning’s mortgage rates higher by approximately .125 of a discount point if comparing to Thursday’s early pricing.



30 yr - 2.88%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Employment Situation

Today’s big news was November’s Employment report at 8:30 AM ET. It revealed that the U.S. unemployment rate remained unchanged at 3.7% last month while only 155,000 new jobs were added to the economy. The unemployment rate matched forecasts while the payroll number fell short of the 190,000 that was expected. There were also revisions to October and September’s payroll numbers, yielding 12,000 fewer jobs over that time frame. The readings are considered good news for bonds and mortgage rates because they indicate the employment sector was weaker than many had thought.



Employment Situation

Another reading in the data that the bond market is pretty sensitive to is average hourly earnings. This morning’s release showed a 0.2% increase in earnings when analysts were expecting to see a 0.3% rise. The smaller increase is good news for bonds since this reading is a measurement of wage inflation. However, the annual rate still climbed to 3.1%, causing some concern in the bond market. It is this reading that may be preventing more of a positive reaction in the bond market.



Misc Fed

The report doesn’t do anything to alter the likelihood of the Fed raising key short-term interest rates later this month. That said, it does give support to the theory that the Fed may not be as aggressive with interest rates next year and further out. It will be interesting to see if the Dec 19th FOMC meeting statement and projections reveal a change in the Fed’s expected path for raising rates. We can expect to see a very volatile afternoon on the 19th.



University of Michigan Consumer Sentiment (Prelim)

Also posted this morning was December's preliminary reading to the University of Michigan's Index of Consumer Sentiment at 10:00 AM ET. It came in at 97.5, unchanged from November’s final. Forecasts were calling for a small decline. This index tracks consumer sentiment about their own financial and employment situations, giving us an indication of their willingness to spend. That is important because consumer spending makes up almost 70% of our economy and the theory is that rising confidence in financial matters means consumers are more apt to spend money, fueling economic growth. Today’s release is somewhat of a disappointment for bonds since the reading was higher than expected but it wasn’t enough of a miss to cause a reaction in mortgage pricing.




Next week brings us the several important reports that are likely to affect mortgage rates, including a couple of important inflation reports and a measurement of consumer spending. Monday has nothing of importance set. The rest of the week includes two important inflation readings and important consumer spending data. Look for details on those releases and the rest of the week’s calendar in Sunday evening’s weekly preview.

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.