Mortgage Rate News 1-8-2018

By James Brooks

The bond market is down 4/32 (2.49%), which should push Raleigh Area mortgage rates higher by approximately .125 of a discount point.

There is nothing of importance taking place today or tomorrow that is expected to affect mortgage rates. The rest of the week has only three monthly economic reports that are relevant to the bond market and mortgage pricing. Most of what is being released is considered to be highly important and all of it is set for two days. In addition to the data, there are two Treasury auctions that we need to watch.

This week?s monthly data includes December?s Producer Price Index (Thursday) along with Retail Sales and Consumer Price Index (Friday). The Treasury auctions will take place Wednesday and Thursday. Therefore, we can expect to see the most movement in rates the latter part of the week.

Overall, look for Friday to be the most active day for mortgage rates, although we should see some movement Thursday also. It is my opinion that the benchmark 10-year Treasury Note yield is going to make a big move in the very near future. If it breaks above 2.50%, we may see an upward trend in yields and mortgage rates begin. On the other hand, breaking below 2.42% is likely to trigger a larger move lower, improving mortgage rates. We should start hearing more talk about the flattening yield curve also, where the difference in shorter-term and long-term yields minimize. Historically, a flattening curve has preceded an economic slowdown, so it is something we should be paying attention to. There are a couple different theories in the markets as to why the yield curve is where it is right now. However, if history repeats itself again, this would be a very good sign for mortgage rates.

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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