Rate Lock Advisory

Tuesday, January 31th

Tuesday’s bond market has opened in positive territory following favorable results in this morning economic data. Stocks are calm with the Dow down 15 points and the Nasdaq up 30 points. The bond market is currently up 10/32 (3.50%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.



30 yr - 3.50%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Employment Cost Index (Quarterly)

The Employment Cost Index (ECI) for the 4th quarter was posted at 8:30 AM ET this morning. It showed a 1.0% increase, meaning employer costs for wages and benefits rose a little less than expected. Analysts had predicted a 1.1% rise. The softer reading is a sign that wage inflation was not as strong as thought, making the data good news for rates.



Consumer Confidence Index

Also posted this morning was January's Consumer Confidence Index (CCI) from the Conference Board. They announced a reading of 107.1 that was lower than December’s revised 109.0 and forecasts of 108.1. The decline indicates surveyed consumers were not as confident in their own financial situations than they were last month. Since waning confidence usually translates into softer consumer spending numbers, this was also good news for bonds and mortgage pricing.



ADP Employment

Tomorrow is going to be an interesting day for the financial and mortgage markets. It begins with January’s ADP Employment report at 8:15 AM ET that tracks changes in private-sector jobs. While it does draw attention, it is my opinion that this non-governmental report is overrated and not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that we will get Friday. Still, because we often see a reaction to its results, it is included in this week's calendar. Analysts are expecting to see 165,000 new private jobs were added to the economy. Good news for rates would be a much smaller number.



ISM Index (Institute for Supply Management)

The Institute of Supply Management (ISM) will post their manufacturing index for January at 10:00 AM ET tomorrow that tracks manufacturer sentiment by using surveyed trade executives' opinions of business conditions. It is usually the first economic data released each month and is one of the very important reports we get monthly. Predictions show a reading of 48.0, which would be a small decline from December's reading of 48.4. A number below 50.0 is a sign of contraction in the sector. Therefore, the lower the reading, the better the news for the bond market and mortgage rates because weaker sentiment indicates a slowing manufacturing sector.



Federal Open Market Committee (FOMC) Statement

This year's first FOMC meeting began this morning and will adjourn tomorrow at 2:00 PM ET. There is a strong consensus that Fed Chairman Powell and friends will bump key short-term interest rates higher yet again to help bring inflation under control. They are expected to make a quarter-point increase this week, the smallest move since they began raising these rates last March. Traders will be looking at the post-meeting statement for clarification of the Fed's future plans, particularly regarding when they may stop raising short-term rates. Many analysts feel that Chairman Powell and friends will pause the increases after this meeting to see how much of an impact their previous moves have had on inflation. They don’t want to overtighten, contributing to a possible economic recession. A press conference will take place at 2:30 PM, but this meeting does not include revised economic projections. There is a good possibility of seeing afternoon volatility in the markets tomorrow afternoon.

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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