Rate Lock Advisory

Thursday, August 6th

Thursday’s bond market has opened in positive territory despite stronger than expected economic news. Stocks are mixed but calm with the Dow up 46 points and the Nasdaq down 3 points. The bond market is currently up 11/32 (0.51%), but weakness late yesterday is going to prevent much of an improvement in rates this morning. If you saw an intraday increase in rates before closing yesterday, you should see a slight improvement this morning.

11/32

Bonds

30 yr - 0.51%

46

Dow

27,247

3

NASDAQ

10,994

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Neutral

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment figures were posted at 8:30 AM ET this morning, showing that 1.186 million new claims for unemployment benefits were filed last week. This was a decline from the previous week’s revised 1.435 million initial filings and noticeably lower than forecasts of 1.4 million. Fortunately, bonds were doing well during overnight trading and this was the 20th consecutive week of over 1 million new claims- indicating employment sector weakness. That has allowed bonds to remain positive after the data was posted this morning.

High

Unknown

Employment Situation

Tomorrow morning brings us the July Employment report at 8:30 AM ET. This extremely important release will give us the U.S. unemployment rate, number of jobs added or lost during the month and average hourly earnings. The best scenario for the bond market is rising unemployment, a sizable loss of jobs and little change in earnings. Analysts are expecting to see that 2 million jobs were added back to the economy last month while the unemployment rate fell to 10.5% from June’s 11.1%.

High

Unknown

Employment Situation

Theoretically, the increase in new payrolls and decline in the unemployment rate would be unfavorable news for rates. However, the employment sector is still trying to recover from the shutdown, meaning even though these headline numbers would show progress in the sector, they still would indicate serious trouble in the labor market. Since bonds and mortgage rates tend to thrive in weaker economic conditions, headline numbers that fall short of or match those forecasts should lead to lower rates tomorrow.

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.

Pathfinder Real Estate Services Inc.

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