Mortgage Rates Move Higher 5-3-2017

By James Brooks

The bond market is down 7/32 (2.31%), which is a little worse than where it was when rates were posted this morning. This is enough of a move for some lenders to revise rates slightly higher by .125 of a discount point.

April?s ADP Employment report was released at 8:15 AM ET this morning. It showed that 177,000 private sector jobs were added last month. This was a little stronger than the 170,000 that was expected, but a downward revision of 8,000 to March?s number helps offset April?s increase. That makes the data neutral for bonds and mortgage rates.

Tomorrow has three reports set to be posted that may influence mortgage pricing. First comes the 1st Quarter Productivity and Costs data at 8:30 AM ET. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a sizable decline could cause bond prices to drop and mortgage rates to rise slightly tomorrow morning. It is expected to show a 0.1% rise in worker productivity during the first three months of the year.

Next up is last week?s unemployment figures. They are expected to show that 246,000 new claims for unemployment benefits were filed last week, down from the previous week?s 257,000 initial claims. This report usually doesn't cause much movement in the markets or mortgage rates unless it shows a significant jump or drop in initial claims for benefits because its only a weekly snapshot. The higher the number of claims, the better the news it is for bonds and mortgage rates since rising claims is a sign of employment sector weakness.

The final relevant report of the day will be February's Factory Orders at 10:00 AM ET. This data is similar to the Durable Goods Orders report that was posted last week, except it includes orders for both durable and non-durable goods. It will give us another measurement of manufacturing sector strength. It is considered to be only moderately important to the bond and mortgage markets, so unless it varies greatly from forecasts of a 0.4% increase, I suspect that the data will have a minimal impact on mortgage rates.

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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