February 21st, 2025 1:50 PM by T. Fanning
Hello, I hope you’re having a good Friday!
Federal Reserve officials decided in January that they need to see inflation drop more before lowering interest rates but mentioned concerns about the impact of tariffs. They also stated that as long as the economy stays near full employment, they want to see further progress on inflation before adjusting the federal funds rate. Meanwhile in the short-term, mortgage rates hit their lowest levels in over two months last week.
Next week features key economic reports that might affect mortgage rates. Monday is quiet, but significant releases, including the Fed's preferred inflation readings, will be out early Friday. We'll also see a revision of the 4th Quarter GDP, which initially showed slower-than-expected growth. Additionally, two midweek Treasury auctions may influence rates.
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: 2/21/25
Friday's bond market has opened in positive territory following favorable economic news and another round of stock selling. The major stock indexes are showing losses of 344 points in the Dow and 53 points in the Nasdaq. The bond market is currently up 12/32 (4.46%), which should improve this morning's mortgage rates by approximately .250 of a discount point.
This week's calendar came to a close at 10:00 AM ET with the release of two pieces of economic data. The National Association of Realtors announced home resales fell 4.9% last month, indicating weakness in the housing market. This was a larger decline than was expected and is being attributed to mortgage rates that remain stubbornly high. Weakness in the housing sector makes broader economic growth more difficult. Therefore, we can consider this report to be good news for bonds and mortgage rates.
Also in the good news column is February's updated Index of Consumer Sentiment from the University of Michigan that came in at 64.7. Forecasts had the index slightly changing from the previous estimate of 67.8, not declining like it did. The lower reading means surveyed consumers were far less optimistic about their own financial situations than previously thought. Waning confidence usually translates into softer consumer spending numbers, limiting economic growth (see last Friday's Retail Sales report). This is why this report is also good news for mortgage rates.
Next week has a couple of economic reports scheduled that we expect will have an impact on mortgage rates, but the week starts light with nothing of importance set for Monday. The most important releases will be posted later in the week, including the Fed's preferred inflation readings (PCE indexes) within the Personal Income and Outlays report early Friday morning. We will also get the first revision to the 4th Quarter Gross Domestic Product (GDP) reading after last month's initial estimate showed the economy grew at a slower than expected pace the last three months of 2024. In addition to the data, there are two Treasury auctions that may have a minor influence on rates during afternoon trading midweek. 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... 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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