Mortgage Rate New 5-1-2018

By James Brooks

The bond market is down 5/32 (2.96%), which should push Raleigh Area mortgage rates to increase by approximately .125 of a discount point.

April's Institute for Supply Management's (ISM) manufacturing index was today?s big release, coming in at 57.3. This was a lower reading than the 58.6 that was expected and a noticeable decline from March?s 59.3, indicating fewer surveyed manufacturing executives felt business improved during the month than did in March. That is a sign of weaker manufacturing activity that is good news for bonds and mortgage rates. Unfortunately, a secondary reading within the data that is related to costs showed its highest level in 7 years. This raised inflation concerns that prevented a positive reaction to the headline reading.

Tomorrow has two events that may affect mortgage rates. April?s ADP Employment report is set for release at 8:30 AM ET tomorrow morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs, using ADP's clients that use them for payroll processing as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that usually follows a couple days later. Still, because we do often see a reaction to the report, we should be watching it. Analysts are expecting it to show that 225,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.

Also tomorrow is the FOMC meeting adjournment at 2:00 PM ET. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the post-meeting statement. If the statement gives any hint of change in their current forecasts on the number of rate hikes they expect to make this year, we could see a sizable change to mortgage rates tomorrow afternoon. This meeting will not be followed by a Fed press conference or economic projections, so it will be the post-meeting statement that drives trading.

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.

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