Our Team Marvin Bush, Sales Associate/Team Leader DRE 01729105 Michelle Garcia, Sales Associate DRE 02101807

Rate Lock Advisory

Monday, June 1st

Monday’s bond market has opened well in negative territory, mostly due to Middle East headlines. Stocks are reacting to the same news with the Dow down 106 points and the Nasdaq down 27 points. The bond market is currently down 18/32 (4.51%), which should push this morning’s mortgage rates higher than Friday’s early pricing by approximately .375 of a discount point. Some lenders issued an intraday improvement in rates late Friday as bonds improved at the end of the week. If you saw an intraday improvement, you may see a larger increase this morning than those who did not get a revision.

18/32

Bonds

30 yr - 4.51%

106

Dow

50,925

27

NASDAQ

26,945

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

ISM Index (Institute for Supply Management)

The Institute for Supply Management (ISM) gave us their May manufacturing index late this morning, announcing a reading of 54.0 that was an increase from April’s 52.7 and higher than expected. The increase means more surveyed manufacturing executives felt business improved last month than did in April. Since that is a sign of strength in the economy, we have to label the report bad news for rates.

High

Negative

Iran War Headlines

This morning’s sole economic release is not the primary reason for the weak open in bonds. Headlines that Iran is pulling out of peace negotiations because Israel is still attacking forces in Lebanon is the reason. This raises the possibility that the Iran – U.S. conflict may resume fully and certainly puts into question the likelihood of an end to the war any time soon. As a result, oil prices and bond yields have jumped higher. This renews inflation concerns that make bonds less appealing to investors.

Low

Unknown

None

Tomorrow doesn’t have any relevant economic data, the only day of the week without at least one report scheduled. The rest of the week has five more monthly and quarterly reports that we will be watching, including the extremely influential Employment Friday morning, and a periodic Fed report. We will also be looking for news from the Middle East to contribute to movement in rates. Any indication of a peace deal should lead to lower rates, while headlines that military action is resuming should drive rates higher.

High

Unknown

Employment Situation

Overall, Friday is the most important day for rates by default since it has the almighty Employment report scheduled. Tomorrow is a good candidate as calmest day unless there are new headlines regarding Iran. With so much going on this week, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

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.

The Bush Team @ Miramar International DRE 01357148

3400 Calloway Drive #700
BAKERSFIELD, CA 93312
Equal Housing OpportunityRealtor MLS
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