Rate Lock Advisory

Friday, April 28th

Friday’s bond market has opened relatively flat again following mixed results in today’s batch of economic data. The major stock indexes are mixed also with the Dow down 22 points and the Nasdaq up 2 points. The bond market is currently down 1/32 (2.30%), but because of strength again late yesterday we should see an improvement in this morning’s mortgage rates of approximately .125 point if comparing to Thursday’s early pricing.

1/32


Bonds


30 yr - 2.30%

22


Dow


20,959

2


NASDAQ


6,051

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Positive


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

Yesterday’s 7-year Treasury Note auction went very well with several benchmarks showing a pretty strong interest in the securities. Bonds had already improved from early morning levels when results were posted, but that news coincided with another move higher and caused some lenders to slightly improve mortgage pricing before the end of the day.

High


Neutral


Gross Domestic Product (GDP)

The most important of today’s three economic releases was the preliminary version of the 1st Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It revealed the economy grew at a 0.7% annual rate compared to the 1.2% that was predicted. That headline number is good news for bonds and mortgage rates since it means the economy was not as strong as many had thought. Unfortunately, some secondary readings raised inflation concerns, causing the muted reaction to the report.

Low


Negative


Employment Cost Index (Quarterly)

Today’s other early release was the 1st Quarter Employment Cost Index (ECI). It showed a 0.8% increase, exceeding forecasts of 0.6%. This means that employer costs for wages and benefits rose more than analysts had expected. Because rising wages is a sign of inflation, this is a negative report for bonds and mortgage rates.

Medium


Positive


University of Michigan Consumer Sentiment (Rev)

April’s revised University of Michigan Index of Consumer Sentiment came late this morning. It stood at 97.0, down from the preliminary reading of 98.0 from earlier this month. It was expected to remain unchanged, not revise lower. The decline indicates that surveyed consumers were a little less optimistic about their own financial situations than thought a couple weeks ago. Since waning confidence usually translates into softer levels of consumer spending that fuels economic growth, this data is good news for the bond and mortgage market.

High


Unknown


None

Next week is likely to be very active for the markets and mortgage rates. To summarize, we start with the very important ISM manufacturing index Monday, have an FOMC meeting mid-week and close with the almighty Employment report next Friday. Look for details on all of next week’s activities 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... 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.