Rate Lock Advisory

Friday, December 8th

Friday’s bond market has opened in negative territory following stronger than expected economic news. Stocks are reacting to the same data with gains of 82 in the Dow and 45 in the Nasdaq. The bond market is currently down 20/32 (4.22%), which should cause an increase in this morning’s mortgage rates of approximately .250 of a discount point.



30 yr - 4.22%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Employment Situation

Today’s major economic headlines came from November’s Employment report at 8:30 AM ET. It revealed the U.S. unemployment rate slipped from 3.9% in October to 3.7% last month while 199,000 new jobs were added to the economy. Forecasts had unemployment holding at 3.9% and 175,000 new payrolls. Following suit of the other two, the third prominent headline also came in hotter than predicted. Average earnings rose 0.4% for the month when analysts were expecting 0.3%. The year-over-year rise in earnings pegged expectations, but the monthly increase is contributing to this morning’s bond weakness.



Fed Talk

We certainly did not get the results from this morning’s release that we had hoped for. It is clear that the employment sector remains resilient and it is going to be a thorn for the Fed to work around. A weak employment report would have allowed the Fed to be more conservative with their monetary policy statement at next week’s FOMC meeting, meaning comments that would be favorable for bonds and mortgage rates. It also would have further raised speculation that they would make multiple cuts to key short-term interest rates next year. Today’s stronger numbers creates chaos in predictions for what the Fed may now do going forward.



Univ of Mich Consumer Sentiment (Prelim)

December's preliminary Index of Consumer Sentiment from the University of Michigan was also posted this morning. They announced a reading of 69.4, greatly exceeding estimates of 62.6 and November’s 61.3. The higher reading means surveyed consumers felt better about their own financial and employment situations than they did last month. This is a negative indicator for bonds and mortgage rates because strengthening confidence usually translates into stronger consumer spending that fuels economic growth.



Treasury Auctions (5,7,10,20,30 year)

Next week is incredibly busy with several highly influential economic reports set for release, in addition to the last FOMC meeting of the year and a couple of Treasury auctions that often have an impact on rates. Monday doesn’t have economic data being released that we need to be concerned about but does have a 10-year Treasury Note auction taking place that may come into play during afternoon hours. There is at least one item scheduled each day of the week with the most important set for the middle days. 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... Lock if my closing was taking place between 21 and 60 days... Lock 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

12411 Homestead Way
Auburn, CA 95603