October 27th, 2023 1:44 PM by T. Fanning
Happy Friday, I hope you’re having a good day.
Rates continued their wild fluctuations, but overall, rates improved slightly from last week’s numbers. Next week has plenty scheduled that we need to watch. It starts off light with nothing of importance set for release Monday. Activities will begin Tuesday with a couple of moderately important economic releases. Wednesday is when things start to get really interesting with the Institute for Supply Management (ISM) posting their manufacturing index in the morning and the FOMC meeting adjourning midafternoon. The week will end Friday with the almighty monthly Employment report. We should see a fair amount of volatility in the financial and mortgage markets next week.*
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); 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: 10/27/23
Friday's bond market has opened in positive territory following conflicting economic news. Stocks are mixed with the Dow down 45 points and the Nasdaq up 128 points. The bond market has fluctuated between positive and negative ground, but is currently up 2/32 (3.84%). Another afternoon swing in bonds yesterday caused some lenders to improve rates late in the day this time, instead of an upward change. The difference between this morning's and yesterday's early rates should be approximately .250 of a discount point lower.
Yesterday's 7-year Treasury Note auction was met with a much better demand from investors than Wednesday's 5-year Note sale. Bonds had already made solid improvements after rates were posted yesterday morning, but they definitely extended those gains after the auction results were announced at 1:00 PM ET. This was enough of a move for most lenders to issue an intraday improvement to rates if they had not done so already.
This morning's first piece of data was September's Personal Income and Outlays at 8:30 AM ET. It showed a 0.3% rise in income and a 0.7% jump in spending. These were mixed compared to forecasts that had income moving higher 0.4% and spending up 0.5%. Weaker than expected income is a sign consumers have less money to spend, making it good news for bonds and mortgage rates. Bad news came in the stronger spending that fuels economic growth.
Drawing more attention than the income and outlays figures was the Fed's preferred inflation reading. The monthly Personal Consumption Expenditures (PCE) index came in a bit hotter than expected (up 0.4% vs 0.3%), but the year-over-year rate pegged expectations. It showed that inflation is rising at a slower pace, at least heading in the right direction, and allows us to label that part of the report neutral to slightly favorable for rates. Since the Fed will be meeting next week, this data will certainly be discussed when determining their next monetary policy move.
The University of Michigan gave us their revised Index of Consumer Sentiment for September late this morning. They announced a reading of 63.8 that was higher than the 63.0 from two weeks ago. The upward move means more surveyed consumers felt better about their own financial situations than thought earlier this month. Since strengthening confidence usually translates into higher consumer spending numbers, we need to consider the report bad news for bonds and mortgage rates.
While there are no relevant afternoon events scheduled for today, it is hard to bet against the afternoon volatility in bonds we have seen all week. Some of it can be considered extreme. This means that we shouldn't be surprised by an afternoon change in mortgage rates. The real question is, which direction will it be? It is recommended to proceed very cautiously if still floating an interest rate and closing in the immediate future. There are several events next week that can heavily influence the markets and mortgage rates.
Next week has plenty scheduled that we need to watch. It starts off light with nothing of importance set for release Monday. Activities will begin Tuesday with a couple of moderately important economic releases. Wednesday is when things start to get really interesting with the Institute for Supply Management (ISM) posting their manufacturing index in the morning and the FOMC meeting adjourning midafternoon. The week will end Friday with the almighty monthly Employment report. We should see a fair amount of volatility in the financial and mortgage markets next week. Look for details on all events 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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