More News Moving Mortgage Rates 12-20-2017

By James Brooks

The bond market is down 10/32 (2.49%), which should push Raleigh Area mortgage rates higher by approximately .250 of a discount point.

November?s Existing Home Sales figures were released at 10:00 AM ET today. The National Association of Realtors announced that home resales rose 5.6% last month, reaching their best level since December 2006. The monthly increase was stronger than analysts were expecting, meaning the housing sector is growing at a faster pace than many had thought. That is a sign of economic strength, making the data bad news for mortgage rates.

As with yesterday?s negative open, today?s bond losses are not a result of today?s economic data. The bond market was showing weakness during pre-market trading and the unfavorable economic data certainly did not help curtail the selling. Today?s losses appear to be a result of last night?s Senate passing of the tax reform bill. Neither the vote nor the result came as a surprise, so its hard to explain why there would be such a negative reaction to it. Still, it appears to be the best candidate as the primary cause of this morning?s bond selling. The hope now is since the bill has been passed by the Senate and should be signed by President Trump this week, it could be become a non-factor in trading. The benchmark 10-year Treasury Note yield is not in a good place at 2.48%. If it does not move back below 2.43% soon, we could be in for higher yields and mortgage rates as the year comes to a close.

Tomorrow has a weekly, monthly and quarterly report scheduled for release, but none of the batch are expected to cause much movement in the markets or mortgage rates. The first is last week?s unemployment figures at 8:30 AM ET. They are expected to show that 236,000 new claims for unemployment benefits were filed last week. That would be an increase from the previous week?s 225,000, indicating weakness in the employment sector. The higher the number of claims, the better the news it is for mortgage rates. However, since this is only a weekly snapshot, it takes a significant surprise for the numbers to directly affect mortgage rates.

The quarterly release is the 2nd revision to the 3rd Quarter Gross Domestic Product (GDP), also at 8:30 AM. The GDP is the total of all goods and services produced in the U.S. and is the benchmark reading of economic growth. However, I don't think this data will have an impact on mortgage rates unless it varies greatly from its expected reading. Last month's first revision showed that the economy expanded at a 3.3% annual pace during the quarter and this month's final revision is expected to show the same. A revision higher would be considered bad news for bonds. But since this data is quite aged at this point and 4th quarter numbers will be posted next month, I am not expecting this release to have a noticeable influence on rates.

November's Leading Economic Indicators (LEI) from the Conference Board at 10:00 AM ET is the final release of the day. This release attempts to measure or predict economic activity over the next three to six months. It is expected to show a 0.4% increase, meaning that it is predicting economic growth over the next several months. This probably will not have much influence on bond prices or affect mortgage rates unless it shows a much stronger reading than forecasts. The weaker the reading, the better the news it is for bonds and mortgage pricing.

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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