Mortgage Rate News 9-20-2017

By James Brooks

The bond market is down 2/32 (2.25%), which should keep Raleigh area mortgage rates unchanged.

August's Existing Home Sales was posted at 10:00 AM ET. The National Association of Realtors announced a 1.7% decline in home resales last month. This was weaker than expected, hinting at a softening housing sector. However, the decline is being attributed to a 25% drop in Houston area sales, related to Hurricane Harvey. Therefore, not much weight is being given to the data this morning. Traders are more interested in this afternoon?s events.

Those afternoon activities start at 2:00 PM ET with the FOMC meeting adjournment that probably will not yield an increase in key short-term interest rates. There is a small chance of the Fed raising rates at this meeting but the consensus is that they will not. What will be of interest is verbiage in the post-meeting statement that may indicate when the Fed will make their next move, which has long expected to be before the end of the year. Analysts and traders will also be looking for changes to the Fed?s massive balance sheet. Rapid selling of holdings is bad for bonds and mortgage rates.

Also at 2:00 PM ET, the Fed will release their revised economic projections for the U.S. The markets are interested in whether Janet Yellen and friends think economic conditions will be stronger or weaker in the coming months and years than previously thought. Key readings the markets will be looking for are the unemployment rate, inflation and overall GDP growth. Downward revisions by the Fed will be good news for bonds and mortgage pricing because it would mean another bump to key short-term interest rates before the end of the year may not be a sure thing after all. On the other hand, upward revisions that indicate the economy is likely to support a Fed rate hike could cause bond selling and an increase to mortgage rates.

The adjournment, post-meeting statement and economic projections will be followed by a press conference with Fed Chair Yellen at 2:30 PM ET. All Fed meetings are highly important, but this one is particularly significant for the financial and mortgage markets due to the uncertainty of when the Fed will make another monetary policy move and unwind their current holdings. Analysts and market traders will be watching her words carefully for any indication on the likelihood of a rate hike later this year (assuming one was not made at this meeting). Any question or answer at the press conference can impact the markets, so there is a decent chance of seeing quite a bit of volatility this afternoon.

We will update this report shortly after the markets have an opportunity to react to the Fed?s actions and words. There are a couple of minor economic reports set for release tomorrow. They will be addressed in this afternoon?s update.

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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