Rate Lock Advisory

Wednesday, October 4th

Wednesday’s bond market has opened in positive territory following mostly favorable economic headlines. The major stock indexes are mixed but fairly calm with the Dow down 32 points and the Nasdaq up 47 points. The bond market is currently up 7/32 (4.75), which should erase most of yesterday’s afternoon weakness. This morning’s mortgage rates should be close to Tuesday’s early pricing or slightly higher. If you saw an intraday increase late in the day, you should see a small improvement this morning.



30 yr - 4.75%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



ADP Employment

September's ADP Employment report kicked-off today’s batch of activities at 8:15 AM ET. It showed only 89,000 new private-sector jobs were added to the economy last month, falling short of the 150,000 that was predicted. This was also a smaller number than August’s revised 180,000 new payrolls. We can label this report good news for rates because it signals the employment sector was not as strong as many had thought. However, we also cannot rely on this report to predict what Friday’s governmental Employment report will show. While taking a victory today is justified, it would be wise to remain cautious heading into Friday’s version.



ISM Service Index

Also contributing to this morning’s gains is the ISM’s non-manufacturing index that was announced at 53.6. This was close to expectations of 53.7 but was also a decline from August’s 54.5. The lower reading means fewer surveyed service executives felt business improved last month than did the month before. Therefore, we are considering the report neutral to slightly favorable for mortgage rates.



Factory Orders

Today’s third report was August's Factory Orders data at 10:00 AM ET. The Commerce Department said new orders at U.S. factories jumped 1.2% when forecasts were calling for a 0.3% increase. The larger increase hints at manufacturing sector strength, making the data bad news for mortgage rates. Fortunately, the ISM and ADP reports both carry more significance in the markets than this report does, limiting its impact on this morning’s rates.



Geopolitical/Financial Issues

We also have today’s OPEC meeting to digest. This is where the 13 oil producing member nations set output quotas, directly impacting the global oil supply. Raising production quotas means there is more oil available in the marketplace and should lower gas and other energy costs, easing inflationary pressures-particularly at the pump. On the other hand, if they lower output, we will likely see crude oil prices rise that translate into higher fuel costs and more inflation fears that make bonds less attractive to investors. The latter would lead to higher mortgage rates.



Weekly Unemployment Claims (every Thursday)

There is no relevant economic data set for release tomorrow with exception to maybe weekly unemployment figures. They are expected to show 225,000 new claims for benefits were filed last week, up from the previous week. An increase in claims is a sign that the employment sector weakened from one week to the next. This means the larger the number tomorrow, the better the 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... 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.

Bonnie Andrews

American Mortgage Services