December 23rd, 2022 3:22 PM by T. Fanning
I’d like to wish you and yours a Merry Christmas and Happy Holiday!
Rates ended higher this week. We have an adjusted trading session today ahead of the holiday. Bond trading will close at 2:00 PM ET while stocks have a full day scheduled. All the markets will be closed Monday in observance of Christmas Day and will reopen for regular trading Tuesday morning. As expected, we are seeing pressure in bonds ahead of the extended weekend. This is common as traders look to protect themselves from headlines during the extended closing. Next week has little scheduled that is likely to influence mortgage rates.*
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans; 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 also can do hobby farms, Ag properties and Non-QM (stated income, verified assets for self-employed borrowers)! To see a detailed list of programs, visit our website: www.homeloanmortgageco.com/mortgageprograms
Last Updated: 12/23/22
Friday's bond market has opened in negative territory following mixed economic news. Stocks are looking to head into the holiday weekend with more losses, pushing the Dow down 79 points and the Nasdaq down 67 points. The bond market is currently down 14/32 (3.73%), which should cause an increase of approximately .250 of a discount point in this morning's mortgage rates.
There were two relevant economic reports posted early this morning. One was November's Durable Goods Orders that showed a 2.1% decline in new orders for big-ticket products that such as appliances, airplanes and electronics. Analysts were expecting a 1.0% decline, indicating the manufacturing sector was weaker than expected last month. While that is a sizable variance from forecasts, this data is known to be quite volatile from month to month. In other words, it is not as relevant as it would have been if it came in most of the other reports that we consider important to the markets. Furthermore, a secondary reading that excludes more costly airplanes and other transportation items showed a tad stronger increase than expected.
Second was Personal Income and Outlays data for November. It revealed a 0.4% rise in income and a 0.1% increase in spending. Income exceeded expectations of 0.3%, but spending pegged forecasts. More importantly, the PCE inflation reading fell short of predictions. This is highly relevant because the Fed relies on this reading when determining monetary policy (rate increases). Slowing inflation will allow the Fed to be less aggressive with those rate hikes and makes bonds more appealing to investors that should lead to lower mortgage rates.
The University of Michigan announced a reading of 58.7 in their revised Index of Consumer Sentiment for December. This was an upward revision to the preliminary reading of 59.1 that was posted two weeks ago. The increase means surveyed consumers felt better about their own financial situations than previously thought. Since rising confidence usually translates into stronger consumer spending numbers that fuel economic growth, this report can be labeled negative for mortgage rates.
Lastly, New Home Sales data for November showed an unexpected increase in sales of newly constructed homes. This housing report doesn't draw too much attention because it covers a much smaller portion of the housing market than this week's Existing Home Sales report did. Still, because analysts were expecting to see a decline in sales, we have to consider the report slightly bad news for rates.
We have an adjusted trading session today ahead of the holiday. Bond trading will close at 2:00 PM ET while stocks have a full day scheduled. All the markets will be closed Monday in observance of Christmas Day and will reopen for regular trading Tuesday morning. As expected, we are seeing pressure in bonds ahead of the extended weekend. This is common as traders look to protect themselves from headlines during the extended closing.
Next week has little scheduled that is likely to influence mortgage rates. We will address next week's calendar in our weekly preview that will be posted Monday morning instead of the traditional Sunday evening.
We would like to take this opportunity to wish you and yours a safe and wonderful holiday!
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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