Rate Lock Advisory

Tuesday, May 30th

Tuesday’s bond market has opened in positive territory as traders react to the weekend news of an agreement that makes avoiding a debt default less likely than it was Friday. Stocks are not responding to the news as well as bonds are. The major indexes are mixed with the Dow down 94 points and the Nasdaq up 79 points. The bond market is currently up 11/32 (3.73%), which should improve this morning’s mortgage rates by approximately .250 - .375 if a discount point compared to Friday’s early pricing. The financial and mortgage markets were closed yesterday for the Memorial Day holiday.



30 yr - 3.73%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Consumer Confidence Index

Today’s only relevant economic data was May’s Consumer Confidence Index (CCI) at 10:00 AM ET. It came from the Conference Board, who is a private business research group and not a governmental agency. They announced a reading of 102.3 that was higher than the 99.8 that was expected but still lower than April’s upwardly revised 103.7. The decline is good news for rates because it indicates consumers are not as optimistic about their own financial situations as they were last month, meaning they are less likely to make a large purchase in the near future. However, since the reading came in higher than predicted, we need to label it slightly negative for bonds and mortgage pricing.



Debt Ceiling/U.S. Debt Default

The remainder of the week brings us five more economic reports, two of which are considered to be key data and are expected to heavily influence the markets. In addition to the data and Fed talk, we also will be watching debt-ceiling headlines as the agreement struck this weekend begins the approval process in congress. Any hiccups or hurdles that may arise should cause a negative reaction in the bond market, leading to higher mortgage rates. As long as it stays on course to pass and be signed by the June 5th default deadline, bonds and mortgage pricing should remain unaffected or show a slight improvement after today’s initial move.



Fed Talk

Tomorrow’s attention will be focused mainly on a couple Fed member speaking engagements throughout the day and the afternoon release of the Fed Beige Book. The Fed speeches are the last ones before they go into their quiet period of two weeks prior to an FOMC meeting. If we are to hear anything new from them before the June 13-14 meeting, it will have to come today or tomorrow.



Fed Beige Book

The Federal Reserve's Beige Book will be posted at 2:00 PM ET tomorrow. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. via business contacts in each Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. Tomorrow's update is expected to show weaker economic activity since the last version. If there is a reaction in the bond market or mortgage pricing, it will happen during mid-afternoon hours.



Employment Situation

Overall, Friday is the most important day for rates since it has the almighty Employment report scheduled. Thursday may also be noticeably active with the ISM manufacturing index and other news. No day stands out as a good candidate for calmest for rates, meaning we can expect to see movement every day. Therefore, it would be prudent to keep an eye on the markets 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... 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.