Rate Lock Advisory

Wednesday, February 1st

This week’s FOMC meeting has adjourned with an announcement of a .250 bump to key short-term interest rates, a move that brings them to their highest level since October 2007. It was the smallest hike the Fed has made since they started raising rates back in March of last year. The post-meeting statement indicated the Fed acknowledged inflation has started to ease but is still too high. It is also clear the Fed continues to make further increases in the future. In short, no major surprises so far even though we are seeing a strong positive reaction in the markets. Chairman Powell is currently in his press conference, so unless something unexpected is said we should see an intraday improvement to rates soon.



30 yr - 3.40%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock




Stocks and bonds both have rallied since the 2:00 PM ET adjournment. The Dow is up 69 points while the Nasdaq has jumped 224 points. The bond market is currently up 30/32 (3.40%), which should cause mortgage rates to improve by approximately .375 - .500 of a discount point from this morning’s levels.



ADP Employment

The first of this morning’s economic releases was January’s ADP Employment report at 8:15 AM ET. It showed that only 106,000 new private-sector payrolls were added last month, falling well short of the 165,000 that was predicted. As a sign of weaker than thought conditions in the employment sector, we can label the report favorable for bonds and mortgage rates. However, it is important to remember this data isn’t often accurate in predicting what Friday’s extremely influential monthly governmental Employment report will show. In other words, this is good news today, but we should remain cautious about Friday’s version.



ISM Index (Institute for Supply Management)

One of this week’s major economic releases was the Institute of Supply Management’s (ISM) manufacturing index at 10:00 AM ET. They announced a 47.4 reading, pointing towards slower manufacturing activity. The markets were expecting to see 48.0, making the report good news for bonds and mortgage rates.



Productivity and Costs (Quarterly)

In addition to weekly unemployment claims, Employee Productivity and Costs data for the 4th quarter will also be released early tomorrow morning. It can cause a change in the bond market but should have a minimal impact on mortgage pricing. If the productivity reading varies greatly from analysts' forecasts of a 2.7% rise, we may see a slight move in mortgage pricing. Higher levels of worker productivity are good news for the bond market because it allows the economy to expand without fueling inflation.



Factory Orders

December's Factory Orders data is set for release at 10:00 AM ET tomorrow morning. It is similar to last week's Durable Goods Orders release in giving us a measurement of manufacturing sector strength, but this data includes new orders for both durable and non-durable goods. It is not one of the more important reports we get each month. However, it can influence mortgage pricing if it varies greatly from forecasts. Traders are expecting a 2.2% rise in new orders, indicating gains in the manufacturing sector. The bond market would like to see a decline, meaning that manufacturing activity was noticeably weaker than many had thought.

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.