Rate Lock Advisory

Thursday, March 5th

Thursday’s bond market has opened in negative territory again as inflation concerns take center stage. Stocks are mixed with the Dow down 433 points and the Nasdaq up 8 points. The bond market is currently down 8/32 (4.13%), which should cause an increase of approximately .250 of a discount point in this morning’s mortgage rates.

8/32

Bonds

30 yr - 4.13%

433

Dow

48,305

8

NASDAQ

22,815

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Neutral

Fed Beige Book

Yesterday’s afternoon release of the Federal Reserve’s Beige Book report gave us mixed results from the last update. In short, it showed seven of the Fed’s twelve regions reported modest economic growth while the remaining five said activity was flat or declined. Nine of the regions said that businesses in their area said they were passing tariff-related price increases onto consumers, which is causing consumers to be more hesitant to spend. A majority of the regions reported stable employment since the previous update. None of these points came as a big surprise, so we saw little reaction in bonds to the 2:00 PM ET release.

Medium

Neutral

Weekly Unemployment Claims (every Thursday)

The first of this morning’s two economic releases was last week’s unemployment figures at 8:30 AM ET that revealed 213,000 new claims for jobless benefits were made. This was unchanged from the previous week’s revised number that was revised upward by 1,000. Since forecasts called for 215,000 new filings, the data is technically slightly bad news for rates. However, this was a small variance in a weekly update. Therefore, we have not seen much reaction to the news in this morning’s bond trading or mortgage pricing.

Medium

Negative

Productivity and Costs (Quarterly)

Also posted early this morning was Employee Productivity and Costs data for the 4th quarter. It showed that worker output rose at a 2.8% annual pace during the final three months of the year. This was a softer pace than the revised 3rd quarter rate of 5.2%, but stronger than the 1.9% that was expected. Unlike many other reports we see, a stronger productivity rate is good news for bonds because it allows for economic growth with less fear of inflation. That said, a secondary reading in the data that tracks labor costs came in stronger than expected. This secondary reading is bad news and causes us to label the report slightly negative for rates.

High

Unknown

Employment Situation

The week’s calendar closes tomorrow with two major economic releases, both set to be posted at 8:30 AM ET. One is February’s governmental Employment report that gives us broad insight into the labor market, such as the U.S. unemployment rate, number of new jobs added or lost and the average hourly earnings change. The current consensus is for the unemployment rate to have held at January’s 4.3% and approximately 59,000 new jobs added to the economy while monthly earnings rose 0.3%. Stronger than expected numbers will likely fuel more selling in bonds that would cause a sizable upward revision to mortgage rates. On the other hand, disappointing numbers would be good news for mortgage rates.

High

Unknown

Retail Sales

Next will be the release of January's Retail Sales report. This data is very important to the financial markets because it measures consumer spending and that category makes up over two-thirds of the U.S. economy. Analysts are expecting to see a 0.3% decline in sales, meaning consumers spent less in January than in December. If it reveals weaker than expected retail-level sales, the bond market could rally, improving mortgage rates, assuming the employment data isn’t stronger than predicted.

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.

Ameritrust Mortgage Associates,LLC (NMLS#167664)

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