Rate Lock Advisory

Wednesday, May 27th

Wednesday’s bond market has opened in positive territory despite a lack of headline news or economic data to drive trading. Stocks are mixed with the Dow up 286 points and the Nasdaq down 47 points. The bond market is currently up 6/32 (0.67%), which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point if comparing to Tuesday’s early pricing.



30 yr - 0.67%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Treasury Auctions (5,7,10,20,30 year securities)

There is no relevant economic data being released this morning. There are two afternoon events that we will be watching, starting with results of today’s 5-year Treasury Note auction at 1:00 PM ET. These types of sales generally do not directly impact mortgage pricing, although they can influence general bond market sentiment. If the sale goes poorly, we could see broader selling in the bond market that leads to a slight upward revision to mortgage rates. On the other hand, a strong demand from investors usually makes bonds more attractive to investors, bringing additional funds into the market. The buying that follows sometimes translates into lower mortgage rates. This process will repeat itself tomorrow for the 7-year Note sale.



Fed Beige Book

The second is the Federal Reserve's Beige Book that is named simply after the color of its cover. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. Today’s update is expected to show significant weakness since the last version, which should be favorable to mortgage rates. It will be posted at 2:00 PM ET, meaning if it is going to affect rates, it will happen during mid-afternoon hours.



Weekly Unemployment Claims (every Thursday)

Tomorrow brings us three releases for the markets to digest at 8:30 AM ET, all of which have the potential to cause movement in rates. The one likely to draw the most attention is last week’s unemployment figures at 8:30 AM ET. They are expected to show that another 2 million claims for unemployment benefits were filed last week, pushing the total over the past 10 weeks to a whopping 40.6 million. A high number of claims is a clear sign of employment sector weakness, so the higher the number of filings tomorrow, the better the news it is for mortgage rates.



Durable Goods Orders

April's Durable Goods Orders is the monthly report set for release tomorrow. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years such as airplanes, appliances and electronics. It is currently expected to show a decline in new orders of approximately 19.0%, showing that the manufacturing sector weakened significantly last month. That would be good news for the bond market and mortgage rates, but it won’t be a surprise considering the impact the pandemic was having on the country during the month. This data is known to be quite volatile from month to month under normal circumstances. Therefore, a small variance from forecasts will likely have little impact on tomorrow’s mortgage rates. The larger the decline, the better the news it is for mortgage rates.



GDP Rev 2 (month after Rev 1)

Lastly, the first revision to the 1st quarter Gross Domestic Product (GDP) will also be posted tomorrow. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. Last month's preliminary reading revealed that the economy contracted at an annual rate of 4.8%. Analysts expect to see little change in this update. If the revision comes in stronger than the last estimate, we may see the bond market react negatively and mortgage rates move higher because it would mean the economy was not a weak last quarter as previously thought. Since bonds tend to thrive in weaker economic conditions, a larger than expected rate of contraction would be good news for 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.