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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.
There were no monthly governmental economic reports released this morning, but we did get last week’s unemployment figures from the Labor Department. They announced that 374,000 new claims for unemployment benefits were filed last week, down 14,000 from the previous week’s total and well below what analysts were expecting. The smaller number of new claims indicates a stronger than expected employment sector last week, making the data negative for the bond market and mortgage rates. Fortunately, this report tracks only a single week’s worth of new claims, limiting its impact on today’s mortgage rates.
Also worth mentioning are stronger than expected results from this morning’s private sector employment related reports. ADP’s monthly Employment report that tracks private sector payroll numbers showed a much larger than expected number of new payrolls and a separate report that tracks estimated job cuts in the near future showed a sizable decline. Both of these reports gave results that were negative for long term securities such as mortgage bonds. However, as with the weekly unemployment update, the reports don’t carry the same significance in the markets as monthly reports from a government agency. Therefore, we have seen them have little influence on today’s mortgage pricing.
Tomorrow morning brings us the release of an extremely important report that has significant influence on the financial and mortgage markets. At 8:30 AM ET tomorrow morning, the Labor Department will post June's unemployment rate, number of new payrolls added or lost and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, a large decline in payrolls and no change in earnings. Weaker than expected readings would likely help boost bond prices and lower mortgage rates tomorrow. However, stronger than expected readings could be extremely detrimental to mortgage pricing. Analysts are expecting to see the unemployment rate remain at 8.2%, with 100,000 jobs added and a 0.2% rise in earnings.
Look for a fairly active and volatile morning tomorrow as the markets react to the release of this data. It is arguably the single most important report we see each month and its results can affect trading and mortgage rates for much longer than just tomorrow’s session. It is just my opinion, but I am thinking that the markets are somewhat expecting bad news from the report. What this means is that matching forecasts could turn into a positive for stocks and negative for bonds. If my theory is correct, we will need to see clearly disappointing results from the bond market to rally and mortgage rates to move noticeably lower. Accordingly, I am recommending a conservative approach towards interest rates if still floating with your lender.
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.
Empire Home Mortgage Inc. is a registered Mortgage Broker with the New York and Florid astate Banking Departments and our loans are arranged through third party providers.
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