Interest Rates as of April 1, 2016

Rates below are based on Princeton Capital’s pricing special with no points with a loan to value of 65% and a FICO above 780. The scenario below reflects a loan amount of $1,800,000.
interest rates 4.1.16-01

Friday’s bond market has opened in negative territory following economic news that was mostly negative for bonds. The stock markets looked like they were going to open in negative ground but have rebounded to show modest gains of 16 points in the Dow and 7 points in the Nasdaq. The bond market is currently down 7/32 (1.79%). However, due to strength late yesterday we should still see a slight improvement in this morning’s mortgage rates if comparing to Thursday’s morning pricing.

This morning had three pieces of data for the markets to digest, two of which are considered highly important. The first was March’s Employment report at 8:30 AM ET. It showed that the U.S. unemployment rate rose 0.1% to 5.0% last month when analysts were expecting it to be unchanged. The report also revealed that 215,000 new jobs were added to the economy, exceeding forecasts of 200,000 new payrolls. The third headline number was average earnings that rose 0.3%, as predicted. The increase in the unemployment rate is technically favorable news, but focus is more on payroll numbers than this figure. The higher job number is negative news since it is a sign that the employment sector was stronger than expected. Fortunately, it is not a significant variance from forecasts, so the impact on today’s rates has been limited.

The second report of the morning came just before 10:00 AM ET when the University of Michigan revised their Consumer Sentiment Index for March. It came in at 91.0, exceeding forecasts of 90.5 and the preliminary reading of 90.0. This means surveyed consumers were more optimistic about their own financial and employment situations than many had expected. Because strengthening confidence usually translates into higher levels of consumer spending that fuels economic growth, we should consider the data negative for the bond and mortgage markets.

This week’s final report was the important Institute for Supply Management’s (ISM) manufacturing index at 10:00 AM ET. The 51.8 reading shows that more surveyed manufacturing executives felt business improved than many were expecting. Analysts were calling for a reading of 49.5. More importantly, it crossed above the 50.0 threshold that means more executives said business improved than said it had worsened. That is also negative news for mortgage rates since it hints at manufacturing sector strength.

Next week only has a few relevant economic reports scheduled for release in addition to the minutes from the most recent FOMC meeting. One of those reports, February’s Factory Orders will be posted late Monday morning. Look for details on it and the rest of the week’s calendar in Sunday evening’s weekly preview.

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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