Rate Lock Advisory

Wednesday, May 1st

WEDNESDAY AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. This was widely expected since the downward trend in inflation stalled this year. There wasn’t much in the statement that came as a surprise to the markets except for news that the Fed was altering their balance sheet plans. They were allowing $60 billion of Treasury securities to mature a month without reinvesting in the market, but are reducing that amount to $25 billion. This reduces the available supply in the market monthly, fueling a nice rally in bonds this afternoon. The press conference with Chairman Powell is in progress, so if there is another surprise it will come from something he says verbally.

24/32

Bonds

30 yr - 4.58%

469

Dow

38,285

208

NASDAQ

15,866

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

None

Stocks are rallying with the Dow up 469 points and the Nasdaq up 208 points. The bond market has also improved since this morning, currently up 24/32 (4.58%), which is enough of a move for many lenders to improve rates by approximately .250 of a discount point by the end of the day if these gains hold.

Medium

Negative

ADP Employment

April’s ADP Employment report kicked-off today’s activities at 8:15 AM ET. It showed 192,000 new private-sector jobs were added to the economy last month. This was closer to the higher end of the range of predictions, but an upward revision to March’s number (184k to 208k) means we still saw the expected monthly decline. Since the total number of new jobs was higher than predicted, we have to label the report neutral to slightly negative for mortgage rates.

High

Positive

ISM Index (Institute for Supply Management)

That was followed by the Institute for Supply Management’s (ISM) manufacturing index at 10:00 AM ET. They announced a reading of 49.2 that fell short of the 50.1 that was expected and breaks a threshold that indicates slowing manufacturing activity. Anything below 50.0 is considered to be recessionary, making the index good news for bonds and mortgage rates.

Medium

Unknown

Productivity and Costs (Quarterly)

In addition to the weekly unemployment update, tomorrow brings us two moderately important reports. 1st Quarter Productivity and Costs data is set for release at 8:30 AM ET. This information helps us measure employee productivity in the workplace. High levels of productivity allow for low-inflationary economic growth. This update will likely be a non-factor for rates though unless it shows a significant variance from forecasts. Productivity is expected to have slipped 1.0% while labor costs reading rose 3.0%. Good news for mortgage pricing would be a stronger rate of productivity and a smaller rise in labor costs.

Medium

Unknown

Factory Orders

March's Factory Orders report is set for release at 10:00 AM ET. This data is similar to the Durable Goods Orders report that was posted last week, except it includes orders for both durable and non-durable goods. It will also give us a measurement of manufacturing sector strength but is considered to be only moderately important to the bond and mortgage markets. That is partly because a big portion of the data was already released with the Durable Goods Orders report. The report will likely have a minimal impact on mortgage rates, even if it shows a much smaller than expected 1.6% increase in orders.

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.

Mainlands Real Estate, Inc

9185 US Highway 19 N
Pinellas Park, FL 33782-5406
Realtor MLSEqual Housing Opportunity
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