February 26th, 2023 2:45 PM by T. Fanning
Hello,
Rates had an ugly week due to more reports indicating inflation is still high. Next week doesn't have a large number of economic reports scheduled but the list includes a couple of important releases that can heavily influence the markets and mortgage rates. Unlike most Mondays, we have an important report to start the new week with the release of January's Durable Goods Orders. Other relevant reports include the Consumer Confidence and ISM manufacturing indexes.*
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
As always, please let me know if I can help you, your friends/family/potential buyers/borrowers!
Last Updated: 2/24/23
Friday's bond market has opened in negative territory following stronger economic data. Stocks are reacting the same, pushing the Dow down 391 points and the Nasdaq down 200 points. The bond market is currently down 13/32 (3.93%), which will cause an increase of approximately .375 of a discount point in this morning's rates if compared to Thursday's early pricing. If you saw an intraday improvement yesterday, you will likely see a little larger increase this morning than those who did not get a revision.
January's Personal Income and Outlays report was released at 8:30 AM ET, revealing a 0.6% rise in income and a 1.8% jump in spending. These readings were mixed in terms of what the bond market wanted to see. Income rose less than the 0.9% that was expected, meaning consumers had less money to spend. On the other hand, spending actually rose much more than the predicted 1.3%. What is driving this morning's bond selling is the Fed's preferred inflation index (PCE) that comes in this report. It rose 0.6% when analysts were expecting a 0.4% increase, indicating inflationary pressures were stronger than thought last month. Because bonds are very sensitive to rising inflation, we are seeing a strong negative reaction to the PCE.
Next up was January's New Home Sales report that showed a surprisingly strong 7.2% spike in sales of newly constructed homes. The number of sales touched their highest level since last March, hinting at strength in a small portion of the housing sector. While this is technically bad news for bonds and mortgage rates, it is the PCE reading that is fueling this morning's bond weakness, not this data.
Completing this week's calendar was the University of Michigan's updated Index of Consumer Sentiment for February. They announced a reading of 67.0 that is an upward revision from the preliminary reading of 66.4 from two weeks ago. The higher number is a sign that consumers are a little more confident in their own financial situations and are likely to spend more. Since stronger consumer spending fuels economic growth that make bonds less attractive to investors, we can consider this report slightly unfavorable for mortgage rates.
Next week doesn't have a large number of economic reports scheduled but the list includes a couple of important releases that can heavily influence the markets and mortgage rates. Unlike most Mondays, we have an important report to start the new week with the release of January's Durable Goods Orders. Other relevant reports include the Consumer Confidence and ISM manufacturing indexes. Look for details on 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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