Rate Lock Advisory

Wednesday, November 4th

Wednesday’s bond market has opened in positive territory despite a huge stock rally. The Dow is currently up 1,034 points while the Nasdaq has gained 512 points, apparently in reaction to the election results. The bond market is currently up 4/32 (4.95%), which should improve this morning’s mortgage rates by approximately .125 of a discount point if compared to Tuesday’s early pricing.

4/32

Bonds

30 yr - 4.95%

1,034

Dow

52,821

512

NASDAQ

25,884

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

ADP Employment

October’s ADP private-sector employment report was released at 8:15 AM this morning, revealing 86,000 non-governmental jobs were added to the economy last month. This was higher than expected and matched September’s downwardly revised total. The higher than expected number of new jobs makes the data bad news for bonds and mortgage rates, even though it doesn’t appear to be having an impact on this morning’s mortgage rates.

Medium

Positive

ISM Service Index

The Institute for Supply Management (ISM) released their October non-manufacturing index (aka service index) at 10:00 AM ET. They announced a reading of 54.5 that nearly pegged forecasts. It was a minor decline from September’s 54.9 to point to slightly weaker business conditions according to service sector executives. Slowing economic activity is generally favorable for bonds and mortgage rates, but this wasn’t enough of a change or variance from estimates to cause a reaction this morning.

Low

Neutral

Election News

As expected, last night’s election results hasn’t had a strong influence on this morning’s bond trading or mortgage pricing. We are seeing stocks react as predictions form about what legislation and other factors related to businesses may come from the Democratic majority in both chambers of congress next year. There is plenty of theories on AI regulation and taxes, but without a super-majority to override a presidential veto, it is hard to believe that much of that will actually come into fruition until possibly the 2028 elections. While stocks react, bonds are holding firm for the most part.

High

Unknown

Iran War Headlines

Something we are certainly watching for is the possibility of a post-election escalation in military action with Iran. There are theories and sources that have said there is a plan for the U.S. to renew attacks on Iran sometime after the election. If this were to happen, we can expect oil prices to move higher, inflation concerns take centerstage again and bond yields to move higher. This would lead to mortgage rates moving higher since they tend to track bond yields. Of course, this is just speculation at this point, but it is something that should be watched, especially if still floating an interest rate and closing soon.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow morning brings us two moderately important economic reports, both set for release at 8:30 AM ET. First will be last week’s unemployment figures. They are expected to show 197,000 new claims for jobless benefits were made last week, up a little from the previous week’s 194,000 initial filings. Rising claims are a sign the employment sector weakened, so the higher the number of new claims tomorrow the better the news for mortgage rates. This is just a weekly snapshot though, meaning it will take a wide variance from forecasts for the report to cause a noticeable move in rates.

Medium

Unknown

Productivity and Costs (Quarterly)

3rd Quarter Productivity data will be the second report. A noticeably larger increase would be good news for the bond market because higher levels of employee productivity allow the economy to expand without pushing inflation higher. The overall productivity reading is predicted to be up 3.1%. A secondary reading that tracks labor costs is expected to show a 1.4% rise in costs. However, it will take a significant variance from forecasts for this report to noticeably affect 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... 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.

Victoria Capital Mortgage Company

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