Rate Lock Advisory

Monday, February 2nd

Monday’s bond market has opened in negative territory following much stronger than predicted economic data. Stocks are rallying on the same news, pushing the Dow higher by 323 points and the Nasdaq up 138 points. The bond market is currently down 10/32 (4.27%), which should cause an increase of approximately .250 of a discount point in this morning’s mortgage rates.

10/32

Bonds

30 yr - 4.27%

323

Dow

49,214

138

NASDAQ

23,600

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

ISM Index (Institute for Supply Management)

This week’s calendar started with the release of January’s manufacturing index from the Institute of Supply Management (ISM) at 10:00 AM ET. They announced a reading of 52.6 that was well above expectations and more importantly, broke the 50.0 threshold for the first time in a year. Any reading above that level is considered to be a sign of growth in the manufacturing sector. January’s reading was the highest since August of 2022, signaling a much stronger than thought manufacturing sector. As an indication of stronger economic activity, the report is clearly bad news for bonds and mortgage rates. This is the sole catalyst for this morning’s bond losses and increase in rates.

Medium

Unknown

None

There is no relevant data set for release tomorrow. The rest of the week has four more monthly and quarterly economic reports that we will be watching, along with a good number of Fed speeches that have the potential to affect mortgage pricing. Wednesday has a couple of those reports scheduled.

Low

Neutral

Government Shutdown

The partial government shutdown shouldn’t be an issue for mortgage rates unless it carries on longer than expected. It is expected to come to an end tomorrow, depending when the House of Representatives approves the revised funding packages that the Senate approved late Friday. In the meantime, the biggest issue with the shutdown and the mortgage industry is a possible delay in closings that require flood insurance because FEMA is affected by partial shutdown. If it extends past tomorrow, then Friday’s release of January’s Employment report may come into question.

Medium

Unknown

Fed Talk

Last week's FOMC meeting ended the Fed's mandatory quiet period. This is the 10 days prior to a meeting and the day after, when Fed members can't talk about monetary policy and related subjects. What this means is that we have plenty of speeches and other talking engagements with current Fed members this week. There a many of them scheduled, but not all of them are expected to draw much attention. Speeches set for Wednesday evening and Friday morning have topics related to the outlook for the economy and/or monetary policy. Bond traders will be watching them closely for any surprises. Those two stand out from the others as most likely to affect mortgage rates.

High

Unknown

Employment Situation

Overall, Friday is the most important day of the week with the Employment report being released, assuming the shutdown doesn’t carry longer than expected. Tomorrow may be the calmest day for rates unless something unexpected happens. There is a strong possibility that we will see multiple days this week with a sizable change in rates. Therefore, please proceed cautiously if still floating an interest rate and closing in the near future.

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.