Rate Lock Advisory

Tuesday, May 5th

Tuesday’s bond market has opened in positive territory to recover a part of yesterday’s afternoon losses. Stocks are showing early gains with the Dow up 237 points and the Nasdaq up 167 points. The bond market is currently up 5/32 (4.41%), but selling late yesterday is likely to keep this morning’s mortgage rates slightly higher than Monday’s early pricing. If you saw an intraday increase in rates before closing, you should see a small improvement this morning.

5/32

Bonds

30 yr - 4.41%

237

Dow

49,178

167

NASDAQ

25,235

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

ISM Service Index

The Institute for Supply Management (ISM) gave us the more important of this morning’s economic reports with the release of their non-manufacturing (services) index at 10:00 AM. They announced a reading of 53.6 that was a bit lower than the 53.8 that expected and a decline from March’s 54.0. The decline means fewer surveyed service sector executives felt business improved last month than those who did in March. As a sign of slower economic activity, we can label this report good news for bonds and mortgage rates.

Low

Negative

New Home Sales

Also late this morning was the release of new home sales figures for February and March. The shutdown-delayed reports showed sales of newly constructed homes rose 8.9% and 7.4% respectively, giving us a small sign of strength in the housing sector. Newly built homes make up a small portion of all home sales in the U.S., so this report doesn’t carry much influence in the markets or mortgage rates. We are labeling the data unfavorable because of the gains, but the data hasn’t had much of an impact on this morning’s mortgage pricing.

Medium

Unknown

ADP Employment

The ADP private-sector Employment report is set for release at 8:15 AM ET tomorrow. While as an employment-related report it does draw some attention, it is often referred to as overrated and not a true reflection of the broader employment picture. It also is not accurate in predicting the results of the monthly government report that will be posted Friday morning. Still, because we do often see a reaction to the data, it is on our calendar. Analysts are expecting it to show that approximately 84,000 private sector payrolls were added to the economy last month. A smaller number would be good news for tomorrow’s mortgage rates.

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.

Victoria Capital Mortgage Company

455 Los Gatos Blvd. Suite 100
Los Gatos, CA 95032
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