October 6th, 2023 2:38 PM by T. Fanning
Fall is in the air – I hope you’re having a good day!
Rates got crushed this week on news of better-than-expected employment numbers. Next week has plenty scheduled that is expected to affect mortgage rates. It is a holiday-shortened week for the bond market due to Monday's Columbus/Indigenous People's Day closure. However, stocks will be open for regular trading.
Economic reports and other events that are likely to directly impact mortgage rates start Wednesday. Between that day and Friday, we will get two highly important inflation reports, the minutes from last month's FOMC meeting, some moderately important data and a couple of Treasury auctions that will come into play during afternoon trading those days. Also worth mentioning are the International Monetary Fund (IMF) and World Bank Group meetings that are being held all week. There have been occasions in the past where headlines from this conference influence the global markets and mortgage pricing.*
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: 10/6/23
Friday's bond market has opened sharply lower following this morning's major economic release. Stocks are also in selling mode with the Dow down 190 points and the Nasdaq down 108 points. The bond market is currently down 28/32 (4.83%), which should cause an increase in this morning's mortgage rates of approximately .500 of a discount point. If you saw an intraday improvement to rates late Thursday, you should see a larger increase this morning as those afternoon gains are erased in this morning's losses.
September's Employment report was posted early this morning, giving us mixed readings on the employment sector. Arguably, there are more favorable figures in the data than unfavorable, but one particular headline is driving this morning's sell-off in bonds. Fueling this morning's move are the 336,000 new non-farm payrolls that were added to the economy last month, more than twice the 158,000 that was predicted. Furthermore, upward revisions to August and July added 119,000 more jobs than previously thought. These numbers indicate a strong employment sector that is defying the Fed's wish of weakness to help drive down inflation.
The other two headlines that tend to influence the markets the most actually were good news for rates. The unemployment rate was unchanged at 3.8%, holding its highest level since last February when it was expected to slip 0.1%. Average hourly earnings, an indication of wage inflation that can easily fuel broader price pressures in the economy, rose 0.2% last month while year over year rose 4.2%. Analysts were expecting to see a 0.3% monthly increase and 4.3% annually. These readings point to wage pressures that were softer than forecasts and since it is related to inflation, we can label it good news. Unfortunately, bond traders are focusing on the payroll number and not the good news.
Next week has plenty scheduled that is expected to affect mortgage rates. It is a holiday-shortened week for the bond market due to Monday's Columbus/Indigenous People's Day closure. However, stocks will be open for regular trading. Many lenders will just use this afternoon's pricing or not allow new rate locks until Tuesday morning.
Economic reports and other events that are likely to directly impact mortgage rates start Wednesday. Between that day and Friday, we will get two highly important inflation reports, the minutes from last month's FOMC meeting, some moderately important data and a couple of Treasury auctions that will come into play during afternoon trading those days. Also worth mentioning are the International Monetary Fund (IMF) and World Bank Group meetings that are being held all week. There have been occasions in the past where headlines from this conference influence the global markets and mortgage pricing. 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... Float 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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