So far this week has not been a good one for MBS (Mortgage Backed Securities).  Traders have been more apt to place their money in the virtually risk-free US Treasuries as our market convulses.  The phenomenon of buying bonds as stocks are falling is referred to by some as "Flight To Quality" (FTQ) buying.  Since the FTQ impetus is the lowest stock prices of the year, and since this impetus took shape at the same time that a key inflation report showed moderation, traders did not mind sacrificing the higher returns offered by mortgages for the security of treasuries.  So despite data that should have seen rates improve so far this week, we have lost a little ground.  Tomorrow holds the ever-important employment report which, if anything other than dead-on with expectations, always creates some market movement.
 
The Numbers:
 

We continue to hover in the low 6% range for the best possible 30 year fixed.  This has moved up slightly as of yesterday and the best rates seen will likely be slightly higher.

 See Rates from Lenders in Your Area

The News:

  • Factory Orders, which help us gauge how much business producers intend to do, came in exactly at the expected, and have had little impact on trading.
  • ADP releases their own jobs number before the "real" one released by the government tomorrow.  Traders do not generally care about this report because it has varied so much from the official jobs report that follows.  Today was no exception as the ADP report fell to its lowest reading in 6 years, yet markets did not react.

Conclusion and Lock/Float Considerations:
There are no other scheduled reports for today that normally impact rates.  Many traders are more focused on the data that will be released tomorrow.  So for the rest of the day, a large swing in stock prices may affect mortgage rates, but remember, this is not always the case.  Treasuries should not be able to widen the gap over mortgages by much more, so at least if they improve, mortgages should not deteriorate.  This puts major emphasis on tomorrow to be a more action-packed day.
 
It's difficult to say if yesterday's weakness in mortgages was "enough," or if there is some more weakness ahead before we are out of the characteristically negative summer cycle.  A lot of one's decision should be based on their beliefs about the stock market and the scheduled data.  The jobs number is forecast to be down by an average amount considering previous reports.  If the ADP report does prove to be any sort of indicator and we are worse than that, mortgage rates could improve.  On the other hand, if the report is stronger than expected and other data is tame or strong (as long as it's not negative), it could spark appreciable interest in buying stocks and create a very negative day for mortgages.

Those developments will be  covered minute by minute in our professional blog for those of you that would want to risk floating into this uncertainty.  but remember, if there is a 1/3 chance each of rates going up, going down, or staying the same, then locking will be the right decision 2/3rds of the time.  There are equal indicators for both sides of the argument tomorrow.  If stocks do not stage a rally today, and consequently are poised to rally tomorrow off tame or better data, locking this afternoon can be a very wise call.  However, if the numbers tomorrow are much more negative than expectations, rates could improve nicely.  My guess is that even if rates improve tomorrow, we likely have a bit more weakness in store before we begin to climb out of the summer slump.  If that weakness comes tomorrow, you would be wise to lock.  If it doesn't, you need to be comfortable with the risk associated with trying to pick up a few extra dollars in a very small window of time.