Rate Lock Advisory

Sunday, September 27th

This week brings us the release of eight monthly and quarterly economic reports for the markets to digest with two of them much more important than the others. In addition to the data, there are also a high number of speaking engagements by Federal Reserve members that may draw attention. Tomorrow is the only day without something of importance scheduled. With such a busy week, there is a good possibility of seeing plenty of movement in rates.

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Bonds


Market Closed

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Dow


Market Closed

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NASDAQ


Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Unknown


Consumer Confidence Index (Conference Board)

September's Consumer Confidence Index (CCI) will start this week’s calendar late Tuesday morning. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show a rise in confidence from August's reading, indicating that consumers were more optimistic about their own financial situations than last month. This means they are more likely to make a large purchase in the near future. Because consumer spending makes up almost 70% of the U.S. economy, good news for rates would be a decline. Analysts are calling for a reading of approximately 88.5, up from August's 84.8. The smaller the reading, the better the news for the bond market and mortgage rates.

Medium


Unknown


ADP Employment

The second report of the week will be September's ADP Employment report before the markets open Wednesday. It has the potential to cause some movement in the markets if it shows much stronger or weaker numbers than forecasts. This report tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. 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 accurate in predicting results of the monthly government report that follows a couple days later. Still, because we have seen reactions to the report, we should be watching it. Analysts are expecting it to show that 650,000 new payrolls were added. Good news for mortgage rates would be a smaller increase.

Low


Unknown


GDP Rev 2 (month after Rev 1)

Wednesday morning also has the second revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this update having much of an impact on the financial markets or mortgage pricing. The GDP is important because it is the total sum of all goods and services produced within the U.S. and is considered the best measurement of economic activity. Wednesday’s update is expected to show that the economy contracted at an annual rate of 31.7%, unchanged from last month's estimate. A significant downward revision would be considered favorable news for rates.

Medium


Unknown


Personal Income and Outlays

Besides last week’s unemployment figures, Thursday morning also brings us two monthly economic reports that will draw plenty of attention. The first is August's Personal Income and Outlays at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. This is relevant to the markets because consumer spending makes up such a large part of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. That is negative news for mortgage rates because bonds tend to thrive in weaker economic conditions. It is expected to show a decline of 2.2% in income and a 0.7% rise in spending. If we see weaker than expected readings, the bond market should react positively, leading to lower mortgage rates Thursday. This report also includes the PCE index that the Fed primarily uses for gauging inflation. A surprise in it can also lead to a move in mortgage pricing.

High


Unknown


ISM Index (Institute for Supply Management)

Even more important will be the release of the Institute for Supply Management’s (ISM) September manufacturing index at 10:00 AM ET Thursday. This index is highly important because it measures manufacturer sentiment, giving us an indication of manufacturing sector strength. It is the first report each month that tracks the preceding month's activity. Thursday’s release is expected to show a September reading of 56.0, indicating that manufacturer sentiment held steady from August's reading. A smaller than expected reading would be good news for bonds and likely lead to lower mortgage rates Thursday.

High


Unknown


Employment Situation

Friday has three reports scheduled for release, but one of them is likely take centerstage and drive mortgage rate movement much more than the others. That will be September's Employment report at 8:30 AM. This report is comprised of many statistics and readings on the employment situation, but the most important are the unemployment rate, the number of new jobs added or lost during the month and average hourly earnings. Current forecasts call for the unemployment rate to slip 0.1% to 8.3%, an increase in payrolls of approximately 825,000 and a 0.4% increase in average earnings. Weaker than expected readings should rally bonds enough to improve mortgage rates, especially if the stock markets react poorly to the news.

Medium


Unknown


Factory Orders

August's Factory Orders data will be released late Friday morning. This Commerce Department report is similar to last Friday's Durable Goods Orders release except it includes orders for both durable and non-durable goods. It is expected to show a 1.3% rise in new orders. A smaller increase would be good news for the bond market and mortgage rates while a larger rise would be bad news. Due to the importance of the Employment report, it is highly unlikely that this release will have an impact on mortgage pricing.

Medium


Unknown


University of Michigan Consumer Sentiment (Rev)

The final report of the day will be the University of Michigan's revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed a 78.9 reading. Analysts are expecting to see no change, meaning consumer confidence was as strong as previously thought. Waning confidence is good news for bonds because consumers that are concerned about their own financial and employment situations are less likely to make a large purchase in the near future, limiting economic growth. Therefore, a lower than expected reading would be favorable news for rates.

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Unknown


None

Overall, Friday is the most important day for mortgage rates due to the almighty Employment report, but Thursday should also be very active. Tomorrow is the best candidate for calmest day. The two big reports scheduled can be market movers, meaning those are days that mortgage rates could drop noticeably or spike higher. We also have the first Presidential Debate Tuesday evening, although it likely will be a non-factor for rates. Keep in mind that it is prudent to watch the markets closely anytime you are floating an interest rate and closing in the near future, but this is especially true when there are so many events scheduled that are relevant to mortgage rates such as this week.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.