Monday Mortgage Rate News 4-16-2018

By James Brooks

The bond market is down 8/32 (2.84%), which should push Raleigh Area mortgage rates to increase by approximately .125 of a discount point.

March?s Retail Sales data was posted early this morning, revealing a 0.6% rise in retail level spending. The headline number indicates consumers spent more than expected last month as forecasts were calling for a 0.4% increase. In a bit of favorable news, a secondary reading that excludes more volatile and costly auto transactions matched predictions of a 0.2% rise. Still, the larger headline number means we should consider the data bad news for bonds and mortgage rates because stronger consumer spending means stronger economic growth.

The rest of the week has four more economic reports scheduled for release that have the potential to influence mortgage rates. We are in earnings season also, where corporations post their quarterly earnings and projections. Strong earnings reports should fuel a stock rally that pressures bonds and leads to higher mortgage rates. However, disappointing earnings news should make bonds more attractive to investors and lead to rate improvements as stocks move lower.

Tomorrow has two more pieces of data set for release, beginning with March's Housing Starts at 8:30 AM ET. This report tracks groundbreakings of new home construction, giving us a measurement of housing sector strength and future demand for mortgage credit. It is not considered to be highly important to the markets but does draw enough attention to influence trading if it reveals surprisingly strong or weak numbers. The report is expected to show an increase in starts last month. Good news for mortgage rates would be a sizable decline in starts that points toward housing sector weakness.

The second report of the morning will be the release of March's Industrial Production data at 9:15 AM ET. It tracks output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for 0.3% increase in production from February's level. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing. Signs of manufacturing sector strength are considered negative news for mortgage rates, while a decline in output would be favorable news for the bond market and mortgage shoppers.

Overall, it is likely to be another active week for mortgage rates. With corporate earnings starting to flow, they can take centerstage if there is an overwhelmingly weak or strong trend in the results of some of the big-name companies. That means any day could end up being the most active for mortgage rates. The least important day of the week looks to be Friday. Unlike most weeks, the most important events are set for release the earlier days. Therefore, there is a good chance of seeing the most movement in rates the early part of the week.

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.

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