Rate Lock Advisory

Wednesday, June 3rd

Wednesday’s bond market has opened well in negative territory following unfavorable employment data. Today’s surprise economic news is also helping to boost stocks, pushing the Dow up 272 points and the Nasdaq up 37 points. The bond market is currently down 20/32 (0.75%), which should push this morning’s mortgage rates higher by approximately .250 of a discount point.



30 yr - 0.75%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



ADP Employment

The first of this morning’s two economic releases was the ADP Employment report for May at 8:15 AM ET. It raised some eyebrows as it revealed that only 2.76 million private-sector jobs were lost during the month, compared to forecasts of 9 million lost jobs. Today’s report also revised April’s number higher, adding 679,000 payrolls to the previous announcement. The data indicates that the private business part of the employment sector was not in as bad shape as expected last month. Even though this report is generally considered to be only moderately important, the huge variance from forecasts is putting noticeable pressure on bonds and mortgage rates this morning.



Factory Orders

April's Factory Orders report was also released this morning, showing a decline of 13% in new orders at U.S. factories. While this is a sizable decline that points towards manufacturing sector weakness (good news for bonds and rates), it pegged expectations. That left traders to focus on the surprise ADP report, leading to this morning’s bond selling and upward move in rates.



Weekly Unemployment Claims (every Thursday)

Tomorrow brings us two more reports for the markets to digest. The one that will draw more attention is the weekly unemployment update at 8:30 AM ET, giving us more insight about the employment sector. Forecasts are calling for it to show that 1.8 million new claims for unemployment benefits were filed last week. A large number of new claims is a sign of a weak employment sector. That means the higher the number of new filings, the better the news it is for tomorrow’s mortgage rates.



Productivity and Costs (Quarterly)

Also set for release early tomorrow is revised 1st quarter Productivity and Costs data. This report measures employee output and employer costs for wages and benefits. It is also considered to be moderately important because it helps us measure wage inflation. Many analysts believe that the economy can grow with low inflationary pressures when productivity is high. Inflation is the number one nemesis of the bond market as it erodes the value of a bond’s future fixed interest payments, which causes yields and mortgage rates to move higher. Last month's preliminary reading revealed a 2.5% decline in productivity due to the pandemic shutdown and a 4.8% increase in labor costs. Tomorrow's update is predicted to show slight revisions. I don't think this will have much of an impact on the bond market or mortgage pricing unless it varies greatly from expectations.

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.