Another Good Day For Mortgage Rates 1-3-2018

By James Brooks

The bond market is currently up 6/32 (2.45%), which should slightly improve Raleigh area mortgage rates by .125 of a point.

Today’s first mortgage-relevant event was the release the Institute for Supply Management’s (ISM) manufacturing index for December at 10:00 AM ET. It came in at 59.7, exceeding forecasts and up from November’s 58.2. The increase indicates manufacturer sentiment was stronger than many had thought, making the news unfavorable for bonds and mortgage rates. This is considered to be an important release, so the muted bond response to the reading is fortunate for mortgage shoppers.

The minutes from last month’s FOMC meeting will be released later today. They will give market participants insight to the Fed's thinking and concerns regarding the economy, inflation and monetary policy. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what they show. They will be released at 2:00 PM ET, so they won't affect the markets or mortgage rates until afternoon hours. The last FOMC meeting was followed by revised Fed forecasts and a press conference by Fed Chair Janet Yellen, so the possibility of seeing something unexpected is minimal. Still, market participants will be looking for any tidbits about the decision to raise key short-term interest rates and when the next move may be made.

Tomorrow has two reports scheduled for release. Both are employment-related and will come during early morning hours. First is the ADP Employment report for December at 8:15 AM ET, which tracks changes in private-sector jobs, using the company's clients that use them for payroll processing as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on our calendar. Forecasts are calling for an increase of 190,000 new payrolls. Good news for mortgage rates would be a much smaller increase in payrolls.

Last week’s unemployment figures will be posted at 8:30 AM ET. They are expected to show that 239,000 new claims for unemployment benefits were filed last week, down from the previous week’s 245,000 initial claims. Since rising claims hints at employment sector weakness, the higher the number of initial filings the better the news it is for mortgage rates. It is worth noting though, that because this is only a weekly report, it likely will have little impact on tomorrow’s mortgage rates unless it shows a significant variance.

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... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now.

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