Rate Lock Advisory

Wednesday, January 28th

WEDNESDAY AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with an announcement that key short-term interest rates were left unchanged. This was widely expected since some Fed members are still concerned that inflation, which is still well above their preferred rate of 2.0%, may start to rise again if they were to lower rates too much. Today’s decision was decided by a 10-2 vote with the two dissents wanting a quarter-point reduction.

2/32

Bonds

30 yr - 4.25%

1

Dow

49,003

58

NASDAQ

23,873

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

There were really no big surprises in the post-meeting statement or press conference with Chairman Powell- at least not so far. They said the economy is on solid ground after the 3rd quarter GDP showed it grew at a 4.4% annual pace with an expectation of another strong quarter during the final three months of the year. The statement also indicated the employment sector has showed some signs of stabilizing and inflation remains elevated. Those last two points are justification for not cutting rates at this time.

Low

Neutral

None

The markets have not had much of a reaction to the news. The Dow is now nearly unchanged after being down 30 points this morning, but the Nasdaq has given up some of its earlier gains, now up 58 points. The bond market is currently down 2/32 (4.25%), which is not enough of a move from this morning’s level to cause an intraday revision in mortgage pricing. We should see rates hold current levels the rest of the afternoon, unless something unexpected causes a big swing in the markets.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

We have three pieces of data set for release tomorrow morning, none of which are considered to be highly important. Last week’s unemployment update at 8:30 AM ET will give us the number of new jobless claims made last week. Forecasts show 205,000 initial filings, up from the previous week’s 200,000. Rising claims are a sign of weakness in the employment sector, meaning good news for mortgage rates would be a higher than expected number.

Low

Unknown

Productivity and Costs (Quarterly)

Also early tomorrow morning will be the release of revised worker productivity numbers for the 3rd quarter. This data is so aged now (July through September months) that regardless of what it shows we probably will not see much of a reaction in the bond market or mortgage pricing. Generally speaking, stronger levels of productivity allow for economic growth with less concern about inflation rising also.

Medium

Unknown

Factory Orders

November’s Factory Orders report will be tomorrow’s third report. It normally is considered to be moderately important, but as a shutdown-delayed release, the age of it should lessen its influence on the markets. Furthermore, we received a good portion of this data in Monday’s Durable Goods Orders report. Analysts are expecting it to show a 1.4% rebound in orders for durable and non-durable goods after October’s update showed a 1.3% decline. Good news for rates, albeit any impact should be barely noticeable, would be another decline in orders.

Medium

Unknown

Treasury Auctions (5,7,10,20,30 year)

Tomorrow also has a 7-year Treasury Note auction that may come into play during afternoon trading. Results will be posted at 1:00 PM ET. Favorable news for mortgage rates would be a strong demand from investors. If the sale draws a lackluster interest, bond prices may drop tomorrow afternoon, leading to an upward revision in rates. Yesterday’s 5-year Note sale was uneventful, so we don’t have high expectations for tomorrow’s auction.

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.