Rate Lock Advisory

Thursday, December 7th

Thursday’s bond market has opened in negative territory, erasing a good part of yesterday’s afternoon gains. Stocks are showing early strength with the Dow up 9 points and the Nasdaq up 99 points. The bond market is currently down 8/32 (4.14%), but strength late yesterday should allow this morning’s rates to be slightly lower than Wednesday’s early pricing. If you saw an intraday improvement before closing, you may see a slight increase this morning.

8/32

Bonds

30 yr - 4.14%

9

Dow

36,063

99

NASDAQ

14,245

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Neutral

Weekly Unemployment Claims (every Thursday)

Today’s only relevant economic release was last week’s unemployment update that showed 220,000 new claims for benefits were filed. This was a bit higher than the previous week’s revised 219,000 initial filings but lower than forecasts of 223,000. The increase indicates a little weakness in the employment sector. However, because this was a small variance from expectations and comes in just a weekly snapshot, it really has had little impact on this morning’s mortgage rates. It appears traders are turning their attention to and preparing for tomorrow’s monthly data.

High

Unknown

Employment Situation

We have two economic reports set for release tomorrow morning, one being the almighty monthly governmental Employment report. Analysts are expecting to see the unemployment rate held at October’s 3.9% while 175,000 new jobs were added to the economy. The income reading is forecasted to show an increase of 0.3%. The 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. Those types of numbers should cause bond prices to rise and mortgage rates to move noticeably lower tomorrow. However, stronger than expected readings may fuel bond selling that would lead to higher mortgage rates.

High

Unknown

Fed Talk

This report always draws significant attention. That said, we can expect to see an overly strong reaction to any surprises tomorrow because many traders feel this release will directly influence the Fed’s monetary policy plans at next week’s FOMC meeting. A strong report will likely cause the Fed to be more cautious with their stated plans for future cuts to key short-term interest rates. It could lead to a warning that another increase in rates may be needed before they start lowering them next year or early 2025. On the other hand, weaker than predicted figures tomorrow should eliminate the potential need for a rate hike and allow some discussion about rate cuts next year. The latter would be extremely favorable for bonds and mortgage rates, not only tomorrow, but next week also.

Medium

Unknown

Univ of Mich 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 late tomorrow morning. This index measures consumer willingness to spend. 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 62.6, which would be an increase from last month's final reading of 61.3. A large decline in confidence would be favorable news for rates, but the Employment report will take center stage tomorrow.

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... Lock 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.