July 8th, 2022 12:38 PM by T. Fanning
Happy Friday, I hope you had a good week.
Rates ended the week a bit higher. Next week has several very important economic reports scheduled for release and a couple of Treasury auctions that are likely to affect rates. The economic data includes two closely watched inflation indexes and a key measure of consumer spending. The more important reports are set for the mid and latter days, while Monday has nothing scheduled that we need to be concerned with.*
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
As always, please let me know if I can help you, your friends/family/potential buyers/borrowers!
Last Updated: 7/8/22
Friday's bond market has opened well in negative territory following stronger than expected economic data. Stocks are also responding negatively to the report, pushing the Dow lower by 158 points and the Nasdaq down 124 points. The bond market is currently down 18/32 (3.06%), which should cause an increase in this morning's mortgage rates of approximately .250 of a discount point over Thursday's early pricing.
Today's big news was the release of June's Employment report. It revealed the U.S. unemployment rate held at 3.6% while 372,000 new jobs were added during the month. The unemployment rate pegged forecasts, but the payroll number was much larger than expected (up 200,000), indicating strength in sector. Average earnings rose 0.3%, also matching predictions. There were a bunch of revisions made to May's previously announced numbers that were mostly higher than what was released last month.
There is much debate about this report. With a great deal of talk about the economy in, or soon to be in a recession, this morning's data contradicts much of it. It also creates a problem for the Fed regarding their plan to attack inflation. Because strong employment is one of the Fed's two primary objectives, they have to consider June's report as a sign of economic strength. That justifies continuing to be aggressive with raising key short-term rates to slow the economy and bring inflation down to their preferred 2.0% annual rate.
The problem is that many other economic indicators are flashing warning signs, leading to the talk about a likely recession. If this report was just an abnormality and not a true reflection of sustained growth in the employment sector, the Fed's aggressive tactics will most likely cause the feared recession, possibly putting us into a deep one.
We are seeing stocks and bonds break the normal move of opposite directions on a strong economic report for that reason. As we would expect, strong employment data is causing bonds to lose ground and mortgage rates to move higher. When bonds are in negative ground, we usually see stocks gain because bad news for bonds is often considered good news for stocks. However, stock traders are looking at the Fed problem that the data causes, fearing their moves to bring inflation down will indeed cause an extended recession. The markets are looking at the same data, but two different trading theories are being applied this morning.
Next week has several very important economic reports scheduled for release and a couple of Treasury auctions that are likely to affect rates. The economic data includes two closely watched inflation indexes and a key measure of consumer spending. The more important reports are set for the mid and latter days, while Monday has nothing scheduled that we need to be concerned with. 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... Float 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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