February 11th, 2022 12:59 PM by T. Fanning
Rates had another ugly week, with news inflation is at a 40-year high. Besides Monday's FOMC meeting, next week also has the highly important Producer Price Index (PPI) and Retail Sales reports scheduled in addition to some housing data and other moderately important releases. The Fed will take centerstage Monday, but there are still other events planned for the week that can move mortgage rates noticeably.*
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 Alt-A (stated income, verified assets for self-employed borrowers)! 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: 2/11/22
Friday's bond market has opened in positive territory, rebounding a little from yesterday's major sell-off. Stocks are mixed with the Dow up 113 points and the Nasdaq down 9 points. The bond market is currently up 11/32 (2.00%), but yesterday's selling is going to cause this morning's rates to be approximately .250 - .375 of a discount point higher than Thursday's early pricing. The exact amount of the increase this morning will depend on how much of a revision(s) you saw yesterday afternoon.
February's preliminary University of Michigan's Index of Consumer Sentiment was released at 10:00 AM ET. It came in at 61.7, down from January's 67.2 and much lower than expected. The weaker reading means surveyed consumers were less optimistic about their personal financial situations than they were last month. Since waning sentiment usually translates into weaker levels of consumer spending, we can consider the data to be favorable for rates. However, this data is not considered to be too important at the current time. Focus is almost entirely on inflation.
Yesterday's bond sell-off was just simply ugly. That's the word that comes to mind the quickest. What started off as a bad morning snowballed throughout the day, pushing the benchmark 10-year Treasury Note yield above 2.00% for the first time since July 2019. In addition to the stronger than expected Consumer Price Index (CPI) that set the initial tone for the day, a Fed member further rattled the markets by indicating they would need to be more aggressive with key rate hikes this year to control inflation than many traders were thinking. Once that headline hit the news wires, bonds made another move lower and many lenders made a second intraday increase to mortgage rates before the end of the day.
We also have been informed that the Fed has set an emergency FOMC meeting for Monday morning. The only logical reason for setting that meeting would be to make a change in monetary policy that they feel can't wait until the scheduled meeting next month. In other words, expect to see an increase in key short-term interest rates Monday. It would not be a complete surprise if they made an initial half point bump to help control inflation that is running at its strongest levels since 1982.
While the current situation has bond traders spooked and worried about rampant inflation, it is important to remember that the long-term goals and preferences of the Fed and bond market actually align when it comes to inflation. One of the Fed's mandates is to keep inflation under control. Lower inflation makes mortgage-related bonds more attractive to investors, leading to lower yields and mortgage rates. The point being, the Fed's action now will help keep mortgage rates lower in the future. Barring another catastrophic event to the economy, there is a good possibility that the low point for mortgage rates is behind us. Still, there is also a decent chance that rates will eventually be lower than they are today. Much depends on what happens the rest of this year, particularly over the next 6-8 months.
Besides Monday's FOMC meeting, next week also has the highly important Producer Price Index (PPI) and Retail Sales reports scheduled in addition to some housing data and other moderately important releases. The Fed will take centerstage Monday, but there are still other events planned for the week that can move mortgage rates noticeably. 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.*
Company NMLS ID: 479289 | LO NMLS: 208694
CO License: 100008854
FL Company License: MBR4416 | FL License: LO89221
Regulated by the Colorado Division of Real Estate
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.