August 4th, 2023 2:21 PM by T. Fanning
Hello, happy Friday!
Rates jumped earlier in the week, nearly hitting 23-year highs. Labor market data released today showed the economy added fewer than expected jobs in July, causing rates to drop. Overall, rates were up a small bit from last Friday’s numbers. Next week starts off light with little scheduled the first couple days, but starting midweek there are a couple of Treasury auctions that may influence rates, along with two important inflation readings that should have a heavy impact on the bond and mortgage markets. While there is not a high number of events on the calendar, most of what is scheduled can cause a noticeable move in rates.*
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); Conventional, FHA and VA 1x Close Construction-Perm; 1.50% Down FHA Advantage Program; CHFA Financing; HomeStyle renovation program; and a Jumbo, 5% down program. We can also do non-traditional programs! To see a detailed list of programs, visit our website: www.homeloanmortgageco.com/mortgageprograms
As always, please let me know if I can help you, your friends/family/potential buyers/borrowers!
Last Updated: 8/4/23
Friday's bond market initially opened in negative ground following mixed employment data, but has since moved into positive territory. Stocks are showing early gains of 123 points in the Dow and 4 points in the Nasdaq. The bond market is currently up 17/32 (4.11%), which should improve this morning's mortgage rates by approximately .375 of a discount point if comparing to Thursday's early pricing. Part of this morning's improvement is a result of gains late yesterday, meaning if you saw an intraday downward revision before closing Thursday, you will probably see a smaller improvement this morning than those who did not.
This morning's only relevant economic data was a major release. July's Employment report was posted at 8:30 AM ET, revealing the U.S. unemployment rate slipped 0.1% to 3.5%. It also showed 187,000 new jobs were added during the month, of which 172,000 were in the private sector. The private sector number is relevant to remind that the ADP report we got Wednesday (up 324,000) is not reliable in predicting the results of the governmental report and does not accurately reflect the overall employment sector. The lower unemployment rate is not good news for rates, but payroll number is, because it was the lowest number since December 2020 and came in lower than the 200,000 that was expected. There were also downward revisions to June and May's payroll number that total 49,000 fewer jobs than previously thought.
Today's third headline number was the 0.4% rise in earnings when forecasts were calling for a 0.3% increase. Even the year -over-year rise was stronger than expected. These are inflationary numbers that can easily spread to other parts of the economy. It is likely this reading that caused the initial negative reaction to the release.
Fortunately, bonds have rebounded into positive ground after traders had a chance to digest the report's details. It seems concern raised by Wednesday's ADP number was not warranted, allowing a relief rally to take place this morning.
Next week starts off light with little scheduled the first couple days, but starting midweek there are a couple of Treasury auctions that may influence rates, along with two important inflation readings that should have a heavy impact on the bond and mortgage markets. While there is not a high number of events on the calendar, most of what is scheduled can cause a noticeable move in rates. Look for details on all of the week's activities in Sunday evening's weekly preview.
If I were considering financing/refinancing a home, I would....
Lock if my closing were taking place within 7 days... Lock if my closing were taking place between 8 and 20 days... Float if my closing were taking place between 21 and 60 days... Float if my closing were taking place over 60 days from now...
This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.*
*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
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