Rate Lock Advisory

Thursday, December 1st

Thursday’s bond market has opened up slightly following mixed economic data. Stocks are also mixed with the Dow down 202 points and the Nasdaq up 30 points. The bond market is currently up 3/32 (3.60%), but a strong afternoon rally yesterday is going to cause this morning’s mortgage rates to be significantly lower than Wednesday’s morning pricing. As bonds rallied late in the day, many lenders made an intraday improvement to rates while some made multiple adjustments. The improvement you see this morning depends on the size and number of revisions made late Wednesday.



30 yr - 3.60%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Fed Talk

Yesterday’s afternoon speech by Fed Chairman Powell brought a strong positive reaction in the bond and mortgage markets. The comment that drew the big reaction was that the Fed will start to slow the pace they are raising key short-term interest rates, likely beginning with this month’s FOMC meeting. He reiterated they will remain aggressive in tackling inflation, indicating there are several more increases coming, at the very least. They just will be making them in smaller sizes than the .750 that came from the past four meetings. The markets took that as a sign the Fed feels they are making some progress in getting inflation under control, causing bonds to stage a significant rally during afternoon trading. Many lenders followed suit by revising rates noticeably lower before closing.



Fed Beige Book

The Fed’s Beige Book report release was also favorable news for bonds late yesterday. The 2:00 PM ET release showed that economic activity was flat or up just slightly from the previous update. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region via business contacts. Those contacts reported a more pessimistic outlook for economic activity during this period that ended November 23rd. Since the Fed uses this information during the FOMC meetings, we can consider the report to be good news for rates. However, the big move in the markets came as a result of Chairman Powell’s words, not this release.



Personal Income and Outlays

This morning’s first piece of data was October's Personal Income and Outlays report at 8:30 AM ET, giving us insight into consumer ability to spend and their current spending habits. The Commerce Department announced a 0.7% rise in income and a 0.8% increase in spending. The rise in income was stronger than expected, but the more important spending reading pegged forecasts. In addition, the Fed’s preferred inflation reading (core PCE) rose 0.2%, also matching predictions. With two headline numbers of no surprise and the third coming in stronger than expected, we can label the report slightly unfavorable for rates.



Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures were also posted early this morning. They showed that 225,000 new claims for benefits were filed, down from the previous week’s revised 241,000. This is considered bad news for bonds and mortgage rates because declining sales is a sign of sector strength. Fortunately, this is just a weekly snapshot and didn’t have an impact on this morning’s pricing.



ISM Index (Institute for Supply Management)

November's Institute for Supply Management's (ISM) manufacturing index was released at 10:00 AM ET, revealing a reading of 49.0 that was lower than expected. A reading below 50.0 means more surveyed manufacturing executives felt business worsened during the month than those who said it improved. This was the first sub-50 reading since May 2020, pointing towards a slowing manufacturing sector that makes the data very good news for bonds and mortgage rates.



Employment Situation

Tomorrow brings us another very important report for the markets to digest. November's Employment report will be released at 8:30 AM ET, giving us the U.S. unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. They are expected to reveal the unemployment rate held at 3.7% while 200,000 new jobs were added back to the economy. The income reading is forecasted to show an increase of 0.3%. The ideal scenario for mortgage shoppers would be a higher unemployment rate, a much smaller increase in payrolls (or a decline) and no change in the earnings reading. Those types of numbers should cause bond prices to rise and mortgage rates to move noticeably lower tomorrow. However, stronger than expected readings may fuel bond selling that would lead to higher 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... Lock if my closing was taking place between 21 and 60 days... Lock 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.