January 31st, 2025 2:56 PM by T. Fanning
Hello! Hard to believe January's already done. 2025 is certainly speeding by.
Inflation news was as expected, with a key price measure (core Personal Consumption Expenditures) up 2.8% yearly and 0.2% monthly. Stocks initially dipped, likely due to the monthly increase not signaling a fast return to the Fed's 2% target, but recovered after closer analysis and positive Fed comments. Potential tariffs, now expected March 1st instead of February 1st, could impact prices. Mortgage rates reacted with a minor improvement versus last week’s numbers.
Next week has fewer economic reports than this week, but some big ones could affect mortgage rates. The manufacturing report (Monday) and jobs report (Friday) are important. Plus, lots of Fed people will be talking, which can also move markets.
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); Conventional 0% down; Conventional, FHA and VA 1x Close Construction-Perm; 1.50% Down FHA Advantage Program; CHFA Financing; HomeStyle renovation program; and a Jumbo, 5% down program. We can also do non-traditional programs! To see a detailed list of programs, visit our website: www.homeloanmortgageco.com/mortgageprograms
Last Updated: 1/31/25
Friday's bond market has opened fairly flat after this morning's inflation data failed to give any surprises. Stocks are showing early gains of 38 points in the Dow and 220 points in the Nasdaq. The bond market is currently up 1/32 (4.51%), but weakness late yesterday is going to cause an increase in this morning's mortgage rates of approximately .125 of a discount point.
This morning's inflation readings in December's Personal Income and Outlays report pretty much pegged expectations. The overall Personal Consumption Expenditures (PCE) index rose 0.3% last month while the more important core reading rose 0.2%. On an annual basis, the overall rose 0.2% from November's 2.4% yearly rate and the core reading held at November's 2.8%. All four numbers are exactly what analysts were expecting to see. These are so influential on the markets because they are the Fed's preferred gauge of inflation. That said, today's news doesn't appear to alter predictions that the Fed will hold their wait and see approach before again adjusting key short-term interest rates.
Other headlines in the report were the 0.4% rise in income and a 0.7% jump in spending. The income reading was on point with predictions, but spending was stronger than thought. Analysts were expecting to see a 0.5% increase in spending. Accordingly, we are labeling the report neutral-to-slightly negative for rates.
The 4th Quarter Employment Cost Index (ECI) also brought no surprises. It revealed a 0.9% increase in the index, signaling employer costs for employee wages and benefits rose moderately during the last three months of the year. Rising wages are troublesome for bonds because it fuels inflation throughout the economy. However, because it showed what was expected, we have not seen a reaction to the report this morning.
Next week does not have a large number of economic reports and other events scheduled like this week did. However, a good portion of what is being released is likely to affect mortgage rates. Scheduled data includes the traditional highly influential new month reports, such as the ISM manufacturing index (Monday) and the governmental Employment report (Friday). Furthermore, this week's FOMC meeting ended the Fed's mandatory quiet period. There are plenty of Fed-member speeches scheduled next week that have the potential to affect the markets also. Look for details on all of next week's activities in Sunday evening's weekly preview.
If I were considering financing/refinancing a home, I would....
Lock if my closing were taking place within 7 days... Lock if my closing were taking place between 8 and 20 days... Lock if my closing were taking place between 21 and 60 days... Float if my closing were taking place over 60 days from now...
This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
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