Rate Lock Advisory

Wednesday, September 22th

WEDNESDAY AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with no change to key short-term interest rates. However, we still got plenty of information to digest from the meeting. Key points include the Fed is starting to plan for a reduction in the $120 billion monthly bond purchases they currently make. Analysts are taking the comments in the post-meeting statement to estimate they will start tapering by the end of the year. The only FOMC meetings scheduled between now and the end of the year come early November and mid-December. It appears they tried to stress that starting to taper the purchases is not a sign they will begin raising key rates, which is likely helping to keep the markets at ease.

3/32


Bonds


30 yr - 1.31%

462


Dow


34,382

189


NASDAQ


14,934

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Positive


Federal Open Market Committee (FOMC) Statement

On the topic of raising short-term rates, it appears that most of the FOMC members are expecting to make approximately 3 or 4 rate bumps before the end of 2023 and a total of 6 or 7 before the end of 2024. The good news in this part of the statement is that only half the members feel a rate hike is needed next year.

High


Neutral


Misc Fed

The revised economic projections were also a mixed bag for traders. The shorter-term revisions were favorable for bonds and mortgage rates because they were revised lower than previous estimates. They now feel the economy will grow at an annual rate of 5.9% this year, down from the 7.0% estimate they made in June. However, next year’s growth rate went from 3.3% to 3.8%. Their prediction for the unemployment rate at the end of this year now stands at 4.8%, up from June’s prediction of 4.5%.

Medium


Neutral


None

The markets have had a limited reaction to this afternoon’s events. Stocks have extended their morning gains with the Dow now up 462 points and the Nasdaq up 189 points. The bond market is currently up 3/32 (1.31%), which should keep mortgage rates at this morning’s levels.

Medium


Positive


Existing Home Sales from National Assoc of Realtors

August's Existing Home Sales data was posted at 10:00 AM ET this morning. The National Association of Realtors announced a 2.0% decline in home resales last month. That was a tad larger of a decline than forecasts, hinting the housing sector may be slowing. This is good news for bonds and mortgage rates because a slowing housing sector makes broader economic growth more difficult.

Medium


Unknown


Weekly Unemployment Claims (every Thursday)

We have two minor reports being posted tomorrow. The first will be last week’s unemployment figures that are expected to show 317,000 new claims for benefits were filed during the week. Rising claims is a sign of employment sector weakness. Therefore, the higher the number tomorrow, the better the news it is for rates.

Medium


Unknown


Leading Economic Indicators (LEI) from the Conference Board

Tomorrow’s monthly report will come from the Conference Board, who will post their Leading Economic Indicators (LEI) for August. The moderately important LEI index attempts to predict economic activity over the next three to six months. It is expected to show a 0.6% increase. A larger increase would be considered negative news for bonds and mortgage pricing.

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.