Rate Lock Advisory

Tuesday, March 3rd

Tuesday’s bond market has opened in negative territory again as Iran-related inflation concerns drive trading another day. Stocks are showing significant losses with the Dow down 1,237 points and the Nasdaq down 591 points. The bond market is currently down 8/32 (4.06%), which should cause an increase in this morning’s mortgage rates of approximately .250 of a discount point if compared to Monday’s early pricing.

8/32

Bonds

30 yr - 4.06%

1,237

Dow

47,667

591

NASDAQ

22,157

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

Geopolitical/Financial Issues

There is no relevant economic data coming today. We are seeing the Iran war influencing both stocks and bonds today. It is evident that the conflict is going to last longer than initially thought and has spread to a regional war instead of limited to U.S and Israel vs Iran. The attacks on ships in the Strait of Hormuz has oil prices spiking and gas prices already higher here in the U.S. There isn’t anything positive for the economy in this war, causing stocks to sell-off. It also is expected to heavily influence inflationary pressures, possibly causing the Fed to raise key short-term interest rates before lowering them again. The latter has bond yields and mortgage rates moving higher.

Medium

Unknown

ADP Employment

Tomorrow allows the bond market to, at least, consider economic data instead of just being influenced by Iran news. The first of tomorrow’s three releases will be February's ADP Employment report at 8:15 AM ET. It is an employment-related report that tracks changes in private-sector jobs. While it does draw attention, it is a non-governmental report that some consider to be overrated and not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that we will get Friday. Still, because we often see a reaction to its results, it is included in this week's calendar. Analysts are expecting to see 45,000 new private jobs were added to the economy last month. A much smaller number would be favorable to mortgage rates.

Medium

Unknown

ISM Service Index

That will be followed by the Institute for Supply Management’s (ISM) non-manufacturing index (aka service index) at 10:00 AM ET that tracks business executive opinions on conditions in the service sector rather than yesterday’s manufacturing index. It is expected to show a reading of 54.0 for February, up slightly from January's 53.8. A reading above 50.0 means more surveyed executives felt business improved during the month than those who said it worsened. Good news for rates would be a much lower reading than what forecasts are showing.

Medium

Unknown

Fed Beige Book

The Fed Beige Book will close tomorrow's activities at 2:00 PM ET. This report details economic activity throughout the country by Federal Reserve region via their business contacts. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during mid-afternoon trading. It probably will not cause a major sell-off in the stock or bond markets but can fuel a strong enough move to cause a minor intraday revision to rates if it reveals noticeably weaker or stronger economic activity and/or inflation since the last update.

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... 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.

Crown Mortgage

2019 Woodbrook Court Suite 5
Charlottesville, VA 22901
Equal Housing Lender
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