Rate Lock Advisory

Wednesday, October 28th

WEDNESDAY AFTERNOON UPDATE:

This week’s FOMC meeting has adjourned with an announcement that key short-term interest rates were left unchanged, as expected, so the Fed can further evaluate more data to see how inflation responds to their previous quarter-point hike. There were no major surprises in the post-meeting statement or press conference (as of yet). The decision was split with two members voting for a rate hike at this time.

10/32

Bonds

30 yr - 5.03%

36

Dow

52,414

18

NASDAQ

26,496

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

High

Neutral

Federal Open Market Committee (FOMC) Statement

The markets haven’t moved far from their morning levels with the Dow now up 36 points and the Nasdaq up 18 points. The bond market is currently down 10/32 (5.03%), which may be enough for some lenders to issue a minor intraday increase in rates soon. Others will likely opt to wait for tomorrow’s data before reflecting this afternoon’s change.

High

Unknown

Gross Domestic Product (GDP)

Tomorrow has three 8:30 AM ET economic reports set for release, including two that are considered to be major reports. First will be the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) that is considered to be the benchmark gauge of economic growth because it is the total of all goods and services produced in the U.S. Accordingly, it is likely to have a big impact on the financial and mortgage markets. Current forecasts show the economy expanded at a 3.1% annual pace during the July through September months after it grew at a 2.2% pace during the second quarter. If we get a noticeably smaller rate of growth, the bond market should rally and mortgage rates will fall because bonds are more appealing to investors during weaker economic times. However, a much stronger economy should lead to an upward move in rates.

High

Unknown

Personal Income and Outlays

September's Personal Income and Outlays report is tomorrow’s other key release. Analysts are expecting to see a 0.3% rise in income and a 0.5% increase in spending. Good news for bonds would be smaller increases in both readings. However, what will draw much more attention than those numbers are the PCE readings in the report. The Personal Consumption Expenditures indexes are the Fed's go-to inflation readings when determining monetary policy at their FOMC meetings. September's overall PCE reading is expected to have risen 0.5% while the more important core data that excludes volatile food and energy costs rose 0.3%. We can expect to see the inflation readings have a much stronger influence on the markets tomorrow than the income and spending numbers. Mortgage rates should move noticeably lower if the report reveals inflation was not as strong as thought.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

The third release of the morning will be last week’s unemployment figures. Rising claims for jobless benefits are a sign of weakness in the employment sector, so good news would be a spike in new filings. Forecasts show 198,000 new claims were made last week, up from the previous week’s 194,000. The higher the number, the better the news for rates. However, the morning’s other two reports will have much more of an influence on rates than this weekly update will.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.