Rate Lock Advisory

Tuesday, June 30th

Tuesday’s bond market has opened in negative territory as traders digest yesterday’s events and wait for the next chapter. The stock markets are showing relatively minor losses, but following yesterday’s heavy sell-off, any gain is welcomed news for stock traders. The Dow is currently up 39 points while the Nasdaq is up 19 points. The bond market is currently down 5/32 (2.34%), but we still should see an improvement of approximately .125 - .250 of a discount point in this morning’s mortgage rates due to strength after rates were posted yesterday.



30 yr - 2.34%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Consumer Confidence Index (Conference Board)

June's Consumer Confidence Index (CCI) was posted late this morning, revealing a reading of 101.4 that was much higher than the 97.5 that analysts were expecting to see. This means surveyed consumers were more optimistic about their own financial and employment situations than many had thought. Since rising confidence usually translates into higher levels of consumer spending that fuels economic growth, we should consider this data negative for the bond and mortgage markets.



Geopolitical/Financial Issues

On the Greece front, there have been no significant headlines affecting trading this morning. There is more hope of a resolution than there was yesterday and there is now talk that missing their payment today isn’t technically considered a default. That has some market participants at ease for the time being, but until there is a set agreement we can expect the situation to influence bond and stock trading.



ADP Employment

Tomorrow has two pieces of data that will likely affect rates. The first is the ADP Employment report at 8:15 AM ET, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs of the company's clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, we are addressing and will be watching it. It is expected to show 220,000 new payrolls. Ideally, the bond market would prefer to see a much smaller increase.



ISM Index (Institute for Supply Management)

The Institute of Supply Management (ISM) will post their manufacturing index for June at 10:00 AM ET tomorrow morning. This very important index measures manufacturer sentiment by surveying trade executives on current business conditions. May's reading that was posted last month came in at 52.8. A reading above 50 means that more surveyed executives felt business improved during the month than those who felt it had worsened, signaling growth in the sector. Analysts are expecting a reading of 53.2, pointing towards a slight improvement in manufacturer sentiment. Good news for the bond market and mortgage rates would be a decline in the index, signaling worsening conditions in the manufacturing sector. This is one of the week's two key reports that are watched closely because it is the first piece of data that tracks the previous month's activity.




Overall, I am expecting to see another active week for the financial markets and mortgage rates. The most important day of the week is Thursday due to the Employment data and early closing, but today and tomorrow are going to be quite interesting as the Greece issue plays out. Because of the importance of some of this week’s data and the volatile Greece situation, I strongly recommend maintaining contact with your mortgage professional 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... 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.