Rate Lock Advisory

Thursday, March 4th

Thursday’s bond market has opened in positive territory following economic data that was mostly favorable to rates. Stocks are showing early losses, pushing the Dow lower by 11 points and the Nasdaq down 164 points. The bond market is currently up 7/32 (1.46%), which should improve this morning’s mortgage rates by approximately .125 of a discount point if comparing to Wednesday’s early pricing. Some lenders revised rates yesterday afternoon as bond trading became volatile again. If you saw an intraday revision Wednesday, you may see a larger or small change this morning, depending on the size and direction of yesterday’s change.



30 yr - 1.46%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Fed Beige Book

Yesterday afternoon’s release of the Fed Beige Book showed that economic activity grew modestly in 8 of the Fed’s 12 regions the first six weeks of the year. Businesses were mostly optimistic about the future due to vaccine rollouts and the easing of COVID restrictions. There were no major surprises in the report, but bonds did seem to briefly extend the gains that started before the 2:00 PM release. With no surprise headlines coming out of the release, we can consider it neutral for mortgage rates.



Weekly Unemployment Claims (every Thursday)

Last week’s unemployment filings were posted at 8:30 AM ET this morning, revealing 745,000 new claims for benefits were made during the week. This was close to expectations and shows the employment sector is still struggling. What makes the report somewhat favorable for bonds and mortgage pricing is the fact this was an increase from the previous week’s revised 736,000 initial filings. Rising claims is a sign the employment sector is weakening, not recovering, and makes broader economic growth more difficult.



Productivity and Costs (Quarterly)

The morning’s second release was the revised Productivity Index for the 4th Quarter of last year. It came in with favorable revisions to both the productivity reading and the labor cost reading. It now shows that worker productivity declined at an annual rate of 4.2% during the quarter compared to down 4.8% from the initial estimate. And the labor cost reading was revised lower by 0.8%, meaning employer costs did not spike as much as previously thought the last three months of the year. Both revisions are technically good news for rates. Unfortunately, this is only a moderately relevant report that is a bit aged at this point. That is why we did not see rates react to the news.



Factory Orders

January's Factory Orders report was the final economic release of the day. The Commerce Department announced a 2.6% increase in new orders at U.S. factories. This was a little stronger than the 2.0% that was predicted, meaning manufacturing activity was stronger than thought as the new year started. Stronger activity is generally bad news for rates, but we have not seen this morning’s rates react to it.



Fed Talk

We also will be watching a webinar taking place at 12:05 PM ET today involving Fed Chairman Powell. He will be appearing as part of the Wall Street Journal’s Job Summit but the topic is expected to be the U.S. economy. Some analysts and traders are expecting him to address the recent jump in bond yields that have also pushed mortgage rates higher. There is a theory that rising yields could restrict the economic recovery. If he does address this topic or say something that is new, we could see a noticeable reaction in the markets and possibly mortgage rates midday.



Employment Situation

Tomorrow morning has one of the single most important monthly reports scheduled for release. That would be February's Employment report at 8:30 AM ET. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a much smaller increase in payrolls than expected and little or no change in earnings. Current forecasts are calling for no change from January's 6.3% unemployment rate, approximately 190,000 new jobs added to the economy and a 0.2% rise in earnings. Stronger than expected readings would be bad news for bonds that may cause a sizable upward revision to mortgage rates. On the other hand, disappointing numbers should contribute to lower 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.