The Home Loan Mortgage Blog

Weekly Update - 7/28/23

July 28th, 2023 11:52 AM by T. Fanning

Happy Friday, I hope you’re having a good day.

 

No surprise, the Fed raised their benchmark rate another .25% earlier this week. The market had already accounted for this increase, so there wasn’t a ton of movement in interest rates. The next question is – will the Fed raise rates again? If economic reports point to inflation continuing to slow, the Feds may decide to stay put; otherwise, the increases will continue until inflation is under control and around the 2% mark. 

 

Rates ended the week mixed. Next week starts light with nothing of importance set for Monday, but the rest of the week brings several reports that often are highly influential to the markets and mortgage rates. They include the new calendar month releases, such as the ISM manufacturing index Tuesday and Friday's monthly Employment report. Between those reports there is also a handful of moderately relevant data that can move rates.*

 

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: 7/28/23

 

Friday's bond market has opened in positive territory due mostly to favorable economic data. Despite the data, stocks are showing early gains also with the Dow up 139 points and the Nasdaq up 235 points. The bond market is currently up 9/32 (3.96%), which should erase yesterday's afternoon selling and bring rates back to Thursday's morning levels. If you saw an intraday increase in rates yesterday, you likely will see an improvement this morning of about the same size.

 

The most important of this morning's three economic releases was June's Personal Income and Outlays data at 8:30 AM ET. It revealed a 0.3% rise in income and a 0.5% jump in consumer spending. Forecasts had the income reading up 0.5% and spending up 0.3%. Weaker than expected income means consumers had less money to spend, but today's report showed that didn't prevent spending from exceeding expectations. With the headline numbers mixed, we can label this part of the report neutral for mortgage rates.

 

This report also contains the Personal Consumption Expenditures index (PCE), that the Fed relies on as a key measure of inflation. Both the overall and core PCE readings rose 0.2% last month, matching predictions. Good news came in the year-over-year numbers for June that showed inflation slowed noticeably on an annual basis compared to May. This is great news for bonds and mortgage rates because easing inflation makes long-term securities, such as mortgage bonds, more attractive to investors and should allow rates to trend lower.

 

Also at 8:30 AM ET came the 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits. The index rose 1.0% when analysts were expecting a 1.1% rise. We can technically consider the reading to be slightly favorable for rates, but this news is not what is driving bond trading this morning. The PCE reading is having much more of an impact on this morning's rates than this index is.

 

Closing out this week's calendar was July's revised University of Michigan Index of Consumer Sentiment that was announced at 71.6. The preliminary reading from two weeks ago and forecasts for today were 72.6, meaning surveyed consumers were less optimistic about their own financial situations than previously thought. Declining confidence is believed to be an indicator of slowing future consumer spending that makes up over two-thirds of the U.S. economy. As a sign of potential weakness in the economy, this reading is good news for mortgage rates.

 

Next week starts light with nothing of importance set for Monday, but the rest of the week brings several reports that often are highly influential to the markets and mortgage rates. They include the new calendar month releases, such as the ISM manufacturing index Tuesday and Friday's monthly Employment report. Between those reports there is also a handful of moderately relevant data that can move rates. 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.
*

 

*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
                                                  

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Posted by T. Fanning on July 28th, 2023 11:52 AM

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