December 20th, 2024 12:57 PM by T. Fanning
Hello, happy Friday! I hope you have a great weekend and a very Merry Christmas and Happy Holiday!
The Federal Reserve cut its key interest rate by 0.25% on Wednesday, its third cut this year. The Fed now predicts only two rate cuts in 2025 and expects to reach its 2% inflation goal by 2026. While economists had anticipated three cuts next year, the Fed aims to balance economic growth and prevent recession by adjusting the federal funds rate, which influences borrowing costs across the economy. Inflation remains slightly elevated, though unemployment stays low. Rates unexpectedly rose after the rate cut, likely due to expectations of fewer cuts next year, but ended the week close to last Friday's levels.
Next week, a few small economic reports are planned around Christmas. The first is December's Consumer Confidence Index, coming Monday from the private Conference Board. Markets will close early on Tuesday and reopen Thursday, but trading will likely be quiet. If a government shutdown happens tonight, it could delay some reports next week unless resolved this weekend.
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
As always, please let me know if I can help you, your friends/family/potential buyers/borrowers!
Last Updated: 12/20/24
Friday's bond market has opened in positive territory following favorable inflation news. Stocks are mixed with the Dow up 119 points and the Nasdaq down 15 points. The bond market is up 13/32 (4.52%), which should improve this morning's mortgage rates by .250 - .375 of a discount point.
This morning's important economic data came in November's Personal Income and Outlays report at 8:30 AM ET that gave us a sign inflation slowed some last month. This report has a good number of readings that bond traders are interested in, including the Fed's preferred inflation gauges, and they all can be labeled favorable for rates. Most importantly, the overall and core PCE readings both fell short of forecasts, rising only 0.1% last month when they were expected to be up 0.2%. They both also came in lighter than expected on a year-over-year basis, up 2.8% and 2.4% respectively.
The other headline numbers in the report weren't nearly as influential as the inflation readings but still are relevant. Income was 0.3% and spending rose 0.4%. Both were 0.1% short of forecasts to indicate consumers had less money to spend than thought and spent less than predicted. Rising income fuels the ability for consumers to spend more and that category makes up over two-thirds of the U.S. economy. Therefore, softer than expected numbers are good news for bonds and mortgage rates.
Today's second report was December's revised Index of Consumer Sentiment from the University of Michigan. They announced a reading of 74.0 that was unchanged from the initial estimate two weeks ago. Rising confidence in their own financial situations means consumers feel better about their own financial situations and are likely to spend more. Since there was no surprise in the update, there was no reaction to the data. Accordingly, we are considering the report to be neutral for mortgage rates.
Next week has a few relevant economic reports scheduled around the Christmas holiday, none of which are considered to be key releases. They begin late Monday morning with December's Consumer Confidence Index that will give us the same type of info that this morning's second release did. It will come from the Conference Board, who is not a governmental agency.
The markets will close early Tuesday and reopen Thursday, albeit likely with a skeleton crew and light or thin trading after the holiday. Furthermore, the looming government shutdown set for midnight tonight could start affecting some of the data releases as early as next week if it is not averted this weekend. 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.
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