Rate Lock Advisory

Friday, July 30th

Friday’s bond market has opened in positive territory following mixed economic data. Stocks are calm but mixed with the Dow up 5 points and the Nasdaq down 52 points. The bond market is currently up 8/32 (1.23%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.



30 yr - 1.23%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Personal Income and Outlays

The first of this morning’s three economic reports was June's Personal Income and Outlays data at 8:30 AM ET. It revealed a 0.1% rise in income and a 1.0% jump in spending. Both readings exceeded forecasts by a noticeable margin (down 0.6% and up 0.5% respectively), making the headline numbers bad news for bonds and rates.



Personal Income and Outlays

Fortunately though, the PCE index in the data that the Fed heavily relies on as an inflation indicator came in below forecasts. The overall and core readings each came in 0.2% below expectations, indicating inflation was not as strong last month as many traders had thought. That is a clear positive for bonds and mortgage rates, helping to offset the negative reaction we may have gotten from the income and spending readings.



Employment Cost Index (Quarterly)

This morning’s second release was the 2nd Quarter Employment Cost Index (ECI) that also fell short of forecasts. The 0.7% increase shows employer costs for wages and benefits did rise during the April through June months, but not as much as predicted. Therefore, we can consider this report as slightly favorable for mortgage rates.



University of Michigan Consumer Sentiment (Rev)

July's revised University of Michigan Index of Consumer Sentiment closed this week’s calendar at 10:00 AM ET. They announced a reading of 81.2, up from the preliminary reading of 80.8. The higher reading means surveyed consumers felt slightly better about their own financial situations than previously thought. Strengthening sentiment usually translates into higher levels of consumer spending that fuels economic growth. While the increase is technically unfavorable for rates, it was a minor variance and has not drawn much attention this morning.



ISM Index (Institute for Supply Management)

Next week brings us fewer economic releases and other events that are expected to influence mortgage pricing, but two of the handful of reports that we will get are considered extremely important to the markets. The week starts and ends with those two. We will get July’s ISM manufacturing index late Monday morning and the almighty monthly Employment report early Friday morning. In between, there are a couple of moderately important releases. However, the most movement in rates will likely come as the week starts or ends. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

Float / Lock Recommendation

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... 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.

Mathews Mortgage, Inc.

BRE # 01216864 NMLS # 331660

3006 State Highway 49 Suite E
Cool, CA 95614