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If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.
The Labor Department gave us both of this morning’s economic releases. The first was 1st Quarter Productivity and Costs data that showed a 0.5% decline in worker output and an upward revision to 4th quarter numbers. Analysts were expecting to see a 0.7% decline in productivity, so the data was better than expected. Also worth noting was a smaller than expected jump in a secondary reading that tracks labor costs. These readings make the data favorable for the bond market and mortgage pricing.
Unfortunately, the second report of the day gave us results that were negative for bonds and mortgage rates. The Labor Department also announced that 365,000 new claims for unemployment benefits were filed last week, down noticeably from the previous week’s revised total of 392,000 new claims. As I somewhat expected, we did see an upward revision to the previous week’s claims, following the recent pattern. However, the large drop is drawing the attention of market participants since it was the largest weekly decline in approximately a year. That news is helping to ease some concern over tomorrow’s monthly report.
April's Employment report will be released at 8:30 AM ET tomorrow and will likely be a market mover. This is where we may see a huge rally or major sell-off in the bond market and potentially large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be an increase in the unemployment rate and a much smaller number of payrolls added to the economy during the month than expected.
Just how much of an improvement or worsening in rates depends on how much variance there is between forecasts and actual readings. This could turn out to be a wonderful day in the mortgage market, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for the unemployment rate to remain at 8.2% and that approximately 162,000 jobs were added during the month.
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.
Empire Home Mortgage Inc. is a registered Mortgage Broker with the New York and Florida State Banking Departments and our loans are arranged through third party providers