Rate Lock Advisory

Friday, December 8th

Friday’s bond market has opened down slightly following mixed results in today’s major economic release. Stocks are in positive ground, pushing the Dow up 31 points while the Nasdaq has gained 47 points. The bond market is currently down 2/32 (2.37%), which with yesterday’s afternoon weakness should cause this morning’s mortgage rates to be slightly higher than Thursday’s morning pricing.

3/32


Bonds


30 yr - 2.37%

31


Dow


24,242

47


NASDAQ


6,860

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Negative


Employment Situation

November's Employment report was posted at 8:30 AM ET this morning. It gave us several important readings on the employment sector, showing that the unemployment rate remained at 4.1% last month and that 228,000 new jobs were added to the economy. The unemployment rate matched forecasts but the payroll number was higher than expected (190k). There were also some revisions to October and September’s numbers, but the net difference over the two months was only 3,000 jobs and not relevant today. Still, this news only helped support the consensus that the Fed is going to raise key short-term interest rates next week.

High


Positive


Employment Situation

The good part of the report was average earnings data. Analysts were expecting to see a 0.3% rise in earnings while today’s report revealed only a 0.2% increase. More good news came in a 0.1% downward revision to October’s earnings reading. The weaker than predicted earnings data eases inflation concerns that erode investor value in bonds. This news is preventing a negative reaction in the bond and mortgage markets.

Medium


Positive


University of Michigan Consumer Sentiment (Prelim)

Also released this morning was December's preliminary reading to the University of Michigan's Index of Consumer Sentiment. The 10:00 AM ET release showed a 96.8 reading that fell short of last month’s 98.5. That means that surveyed consumers were less optimistic about their own financial situations than thought. Forecasts were calling for a slight increase in sentiment. Because waning confidence usually translates into weaker levels of consumer spending, this reading was good news for bonds and mortgage rates.

Medium


Unknown


None

Next week brings us the release of several important economic releases in addition to the last FOMC meeting of the year, which will also include revised economic projections and a press conference with Chair Janet Yellen. There is relevant data being posted every day except Monday. Look for details on next week’s events 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... 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.