|
This week had a handful of economic reports for us to follow that are
relevant to mortgage rates, but it will be more of the same as the past two
weeks with no resolution yet in Washington. There were five monthly reports
scheduled this week that we normally would need to be concerned with.
However, due to the shutdown we are likely to only get two of them.
The bond market will be closed tomorrow in observance of the Columbus
Day holiday as will most banks, so there will not be an update to
this report tomorrow. The stock markets will be open for trading
though. This means that the lenders that are open for business will likely
not be issuing new rates tomorrow, opting to use Friday’s pricing or not
accepting new rate locks. The bond market will reopen for regular trading
Tuesday morning. It is worth noting though that due to weakness in bonds
late Friday, we can expect to see an increase of approximately .250 of a
discount point when new rates are posted unless your lender revised pricing
higher already Friday afternoon.
What we will see this week in terms of monthly economic news, assuming that
nothing changes in Washington, is the Federal Reserve’s Beige Book report
Wednesday afternoon and September’s Leading Economic Indicators (LEI)
Friday morning. The Federal Reserve is self-funded and therefore not
affected by the government shutdown and the LEI comes from a
non-governmental business research group that is based in New York.
The Beige Book will be posted at 2:00 PM ET Wednesday, which is named
simply after the color of its cover. This report details economic
conditions throughout the U.S. by Fed region and is relied upon heavily by
the Federal Reserve when determining monetary policy at their FOMC
meetings. If it reveals stronger or noticeably weaker signs of economic
growth from the last release, we could see bond prices move and mortgage
rates revise Wednesday afternoon. Signs of stronger growth would be
negative for rates while much weaker conditions than the previous release
would be favorable for the bond market and mortgage shoppers.
September's LEI will be released by the Conference Board at 10:00 AM ET
Friday morning. This index attempts to measure future economic activity,
particularly during the next three to six months. Current forecasts are
calling for an increase of 0.6% from August's reading. This would indicate
that economic activity is likely to increase over the next couple of
months. That would be relatively bad news for the bond market and mortgage
rates, but this report is considered to be only moderately important.
Therefore, a small increase would not be of much concern to the bond and
mortgage markets. Ideally, we would like to see a decline.
The reports that are delayed are September’s Consumer Price Index (CPI),
Housing Starts and Industrial Production. The CPI measures inflation at the
consumer level of the economy, so it is considered very important to the
bond market and will be missed. The other two releases are generally
considered to be moderately important to the bond and mortgage markets but
still can affect mortgage rates if they show significant surprises.
Overall, this holiday-shortened week will still likely bring multiple days
of noticeable movement in rates. Besides the minimal economic data to drive
trading, we can also expect any rumors or progress regarding the shutdown
or upcoming debt ceiling deadline to also influence the financial markets
and mortgage rates. I currently believe there is much more risk by floating
an interest rate than potential reward if closing in the near future.
Therefore, please proceed cautiously if still floating a rate and maintain
contact with your mortgage professional.
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...
|
No comments:
Post a Comment