Rate Lock Advisory

Wednesday, December 1st

Wednesday’s bond market has opened in negative territory, extending overnight weakness. Stocks are in rally mode with the Dow up 381 points and the Nasdaq up 189 points. The bond market is currently down 7/32 (1.48%), which with Tuesday’s about-face after this report was posted, should cause an increase in this morning’s mortgage rates of approximately .375 - .500 of a discount point. If you saw an intraday revision yesterday, you may see little change or a slight increase this morning, depending on the size of yesterday’s revision.



30 yr - 1.48%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Inflation News

We saw a reversal of yesterday’s early morning rally after Fed Chairman Powell signaled the Fed may need to start tapering bond purchases at a quicker rate than previously thought. He also appeared to acknowledge that inflation is no longer “transitory” during his testimony before the Senate Banking Committee, indicating the Fed may need to be more aggressive in controlling it. Inflation is the number one nemesis of the bond market, making longer term securities less appealing to investors when it is rising. As a result, bonds quickly fell into negative territory late morning yesterday and struggled to recover throughout the day. Many lenders revised rates higher before the end of the day.



ADP Employment

This morning’s economic data has failed to hurt bonds or help them, despite one being a highly important release. The first report was November's ADP Employment report at 8:15 AM ET that revealed 534,000 new private-sector jobs were added back to the economy last month. This was a decline from October’s revised 570,000 payrolls but higher than expectations. Technically, the number should be negative news for bonds and mortgage rates. Fortunately though, we haven’t seen much of a response to the report.



ISM Index (Institute for Supply Management)

Today’s more important release was November's Institute for Supply Management's (ISM) manufacturing index at 10:00 AM ET. It came in at 61.1, nearly matching forecasts that had called for a modest increase from October’s 60.8 reading. An increase means more surveyed manufacturing executives felt business improved during the month than the previous month. This is a sign of strength in the sector, causing us to label the report slightly negative for rates.



Fed Talk

Fed Chairman Powell is speaking to the House Financial Services Committee today, also part of the Coronavirus Aid act. As we saw, his words caused mayhem yesterday. There is a possibility of it being addressed in the Q&A part of the proceedings. His response and how the markets react could lead to another intraday revision to mortgage pricing today.



Fed Beige Book

We have a fourth item to watch later today when the Federal Reserve's Beige Book is released at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region through business contacts. Since the Fed uses this info during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. Of particular interest is information regarding inflation, unemployment or future hiring. If there is a reaction to the report, it will come during mid-afternoon trading.



Weekly Unemployment Claims (every Thursday)

Tomorrow has no monthly economic data scheduled for release, but last week’s unemployment figures will be posted at 8:30 AM ET. They are expected to show 250,000 new claims for unemployment benefits were made last week. Rising claims is a sign of weakness in the employment sector. Therefore, the higher the number, the better the news it is for rates. Worth noting though, this is only a weekly snapshot and the monthly Employment report will be posted Friday morning. This minimizes the likelihood of the weekly report affecting tomorrow’s 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... 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.