Rate Lock Advisory

Wednesday, March 3rd

Wednesday’s bond market has opened in negative territory despite favorable economic news. Stocks are starting the day mixed again with the Dow up 94 points and the Nasdaq down 73 points. The bond market is currently down 24/32 (1.48%), which should erase all of yesterday’s afternoon rally. Many lenders revised rates lower before closing yesterday. If you saw an intraday improvement, you likely will see an increase of the same size this morning, leaving rates close to Tuesday’s morning levels.



30 yr - 1.48%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



ADP Employment

This morning’s sole economic report was February’s ADP Employment report that tracks payroll changes in the private sector. It revealed only 117,000 new non-governmental jobs were added back to the economy last month. This was well below expectations and lower than January’s revised 195,000. The weaker number should be good news for bonds and mortgage rates, but it doesn’t seem to be appeasing bond traders. Maybe it will be reflected in the recently typical afternoon volatility.



Fed Beige Book

We also have the Fed Beige Book release to watch this afternoon. This report details economic activity throughout the country by Federal Reserve region via business contacts. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction following the 2:00 PM ET release. It usually does not cause a major move in the markets or mortgage rates. If we see a reaction, it will come during mid-afternoon hours.



Weekly Unemployment Claims (every Thursday)

Tomorrow has three pieces of data scheduled, starting with last week’s unemployment figures at 8:30 AM. They are expected to show that approximately 750,000 new claims for unemployment benefits were filed during the week. A high number of claims is a sign of sector weakness, meaning the larger the number tomorrow, the better the news it is for mortgage rates.



Productivity and Costs (Quarterly)

Also early tomorrow morning will be the release of the revised Productivity Index for the 4th Quarter of last year. Analysts are expecting to see a decline of 4.8% in output. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. This release also includes a labor costs reading that can be quite influential if it shows a surprise. Since this data is quite aged now, it likely will have little impact on mortgage rates unless it shows a significant change.



Factory Orders

December's Factory Orders data is set to be released at 10:00 AM ET tomorrow morning. This report is similar to last week's Durable Goods Orders release in giving us a measurement of manufacturing sector strength but includes new orders for both durable and non-durable goods. It is not one of the more important reports we get each month though. Analysts are expecting a 1.9% rise in new orders, indicating strength in the manufacturing sector. The bond market would like to see a large decline, indicating manufacturing activity was weaker than many had thought.

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.

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Michael Skovron PA Skovron Group

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