Mortgage rates hit the lowest levels of a lifetime last week.  The most aggressive loan pricing was seen on Wednesday following a string of weaker than expected housing data. While mortgage rates did rise a few basis points on Thursday, consumer borrowing costs generally recovered on Friday. After lenders repriced for the better, mortgage rates closed the week near the best levels witnessed on Wednesday. HERE is a recap.

Just like last week, the economic calendar in the week ahead is not jammed packed but it does contain a couple of influential data points. The most important release comes on Friday morning with the Official Employment Situation Report.

Things got started slow with only one economic release today: Personal Income and Outlays.   This monthly report provides market watchers with a view into the strength of consumers by tracking what Americans earn and what they spend.  A stronger consumer benefits the stock market while a weaker consumer helps keep mortgage rates low.

This data contains three separate reads on the health of consumers.

  1. Personal Income: the monthly change in income that households receive from all sources (before taxes)
  2. Personal Outlays (consumer spending): the monthly change in the amount of money consumers are spending on durable and non-durable goods and services.  
  3. Personal Savings Rate: the monthly change in the amount of money consumers are saving instead of spending

From the Bureau of Economic Analysis...

  1. Personal Income: increased $53.7 billion, or 0.4 percent, in May. Private wage and salary disbursements increased $22.8 billion compared with an increase of $28.5 billion in April. Census decennial temporary and intermittent workers boosted government wages and salaries by $5.7 billion. Year over year, personal income is up 1.6%, this is lower than the 2.6% year over year gain reported in April. 
  2. Personal Outlays: increased $21.8 billion in May, in contrast to a decrease of $1.2 billion in April. Year over year, consumer spending is up 4.6%.
  3. Personal Savings: increased $27.1 billion to $454.3 billion in May, compared with $427.2 billion in April. Personal saving as a percentage of disposable personal income was 4.0 percent in May, compared with 3.8 percent in April.

This data also provides a read on consumer level price inflation: the PCE price index. The price index for PCE decreased less than 0.1 percent in May, in contrast to an increase of less than 0.1 percent in April.  The PCE price index, excluding food and energy, increased 0.2 percent, compared with an increase of 0.1 percent. Year over year, core PCE rose from 1.2% to 1.3% still well within the Fed’s comfort zone for acceptable price increases.

Here is a look at what might impact mortgage rates in the week ahead:


  • S&P/Case-Shiller Home Price Index (medium impact)  This data tracks the monthly change in the value of residential real estate across the United States.
  • Consumer Confidence (medium impact).  An optimistic consumer is more likely to spend money which benefits stocks while a pessimistic consumer is more likely to save or pay off debt which benefits the bond market.


  • MBA Applications Index (low impact)
  • ADP Employment Report(medium impact)  This data is not as influential as the official Employment Situation Report but it does provide market participants with a sneak peak of the health of the labor market. The farther away this number is from expectations, the more important it will be to investors.
  • Chicago PMI( low to medium impact)


  • Weekly Jobless Claims (low to medium impact)
  • ISM Manufacturing Index (medium impact)
  • Construction Spending (low to medium impact)
  • Pending Home Sales Index (medium impact)


  • Employment Situation (HIGH IMPACT) The data is expected to show our economy lost 110,000 jobs last month following the prior month’s less than expected gain of 431,000.  The unemployment rate is expected to climb from 9.7% to 9.8%.
  • Factory Orders

Most lenders opened the day offering aggressive loan pricing, others were not as aggressive but repriced for the better after MBS prices began to rally around mid-morning. Mortgage rates are ridiculously low, there isn't a better way to put it!

The par 30 year conventional rate mortgage remains in the 4.375% to 4.625% range for well qualified consumers.  To qualify for a par rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee.  You can elect to pay less in fees but you will have to accept a higher interest rate.

I continue to favor locking as mortgage rates are once again priced at lifetime lows.