Rate Lock Advisory

Monday, November 2nd

Monday’s bond market has opened in positive territory despite a strong open in stocks and unfavorable economic news. Stocks are in rally mode with the Dow up 522 points and the Nasdaq up 195 points. The bond market is currently up 12/32 (4.88%), which should improve this morning’s mortgage rates by approximately .125 of a discount point if compared to Friday’s early pricing.

12/32

Bonds

30 yr - 4.88%

522

Dow

52,292

195

NASDAQ

25,632

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 late this morning with the release of the Institute for Supply Management’s (ISM) October manufacturing index. They announced a reading of 55.5 that was higher than expected and an increase from September’s 54.5. The increase means more surveyed manufacturing executives felt business conditions improved last month than did in September. As a sign of strength in the manufacturing sector, the data is bad news for mortgage rates. Fortunately, a drop in oil prices is allowing for traders to put less focus on this morning’s economic news.

Medium

Unknown

Corporate Earnings

The rest of the week brings us six more monthly and quarterly economic reports that may influence mortgage rates, including the almighty monthly Employment report Friday. We will also be watching for corporate earnings/stock movement to have an impact on bond trading again this week and individual Fed member speeches could play a role also if they reveal any big surprises.

Medium

Unknown

Factory Orders

Tomorrow has September's Factory Orders report set for release at 10:00 AM ET. This report is similar to the Durable Goods Orders release that was posted last week by giving us an indication of manufacturing sector strength, except this version includes orders for both durable and non-durable goods. Analysts are expecting a 1.2% increase from August's level, signaling strength in the sector. A decline would be favorable for the bond and mortgage markets, but since a good portion of this data was previously posted, we are not expecting tomorrow’s update to have a strong influence on rates.

High

Unknown

Employment Situation

Overall, Friday is the most important day of the week for rates because the Employment report carries such a high level of influence in the markets. The day rates remain the calmest could be Thursday. It will likely be another very active week for the bond market and mortgage rates, so proceed cautiously if still floating a rate and closing in the near future. As we saw last week, we can see them make a big move without warning.

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.

Thomas-Chambers Company
BRE # 01208644

449 W MacArthur Blvd.
Oakland, CA 94609
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