Mortgage Rates Improve 8-1-2017

By James Brooks

The bond market is currently up 7/32 (2.26%), which should improve Raleigh area mortgage rates by approximately .125 of a discount point.

The first of this morning?s two economic reports was June's Personal Income and Outlays data at 8:30 AM ET. The Commerce Department announced that income was unchanged from May?s level and that spending rose 0.1%. The income reading was much lighter than the expected 0.3% increase but spending pegged forecasts. The data indicates consumers did not have as much income to spend as many had thought, making the data slightly positive for bonds and mortgage rates.

Also posted this morning was the Institute for Supply Management?s (ISM) manufacturing index for July. The 10:00 ET release revealed a 56.3 reading, coming close to the 56.2 that was expected. More importantly though, it was a decline from June?s 57.8. That indicates fewer manufacturing executives felt business improved last month than did in June. Because that is a sign of manufacturing sector weakness, we can consider the news positive for bonds and mortgage pricing.

Tomorrow?s sole relevant release will be July?s ADP Employment report before the markets open. It 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 their payroll processing clients 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 very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week's calendar. Forecasts show an increase of 187,000 new payrolls. The bond and mortgage markets would prefer to see a smaller increase.

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.

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