No Change In Today's Mortgage Rate 12-21-2017

By James Brooks

The bond market is unchanged, which should keep Raleigh area mortgage rates unchanged.

The first of today's economic releases was last week?s unemployment figures at 8:30 AM ET. They showed that 245,000 new claims for unemployment benefits were filed last week, up from the previous week?s 225,000 initial filings. Analysts were expecting to see 236,000 claims, so we can consider the data good news for bonds and mortgage rates. Unfortunately, this is only a weekly snapshot, meaning it has had little impact on today?s rates.

The second revision to the 3rd Quarter Gross Domestic Product (GDP) was also released at 8:30 AM. It revealed that the economy grew at an annual pace of 3.2% last quarter, down slightly from the previous estimate of 3.3%. Because bonds tend to thrive in weaker economic conditions, data pointing to softer economic activity than previously thought is good news for mortgage rates. However, this data is now aged and the current quarter?s activity will be released next month. Therefore, we are seeing little reaction to this data also.

November?s Leading Economic Indicators (LEI) came at 10:00 AM ET. The Conference Board announced a 0.4% increase, matching forecasts. The increase means the indicators are predicting modest economic growth over the next several months. Since there was no surprise, the news hasn?t caused bonds or mortgage pricing to move.

The week?s calendar closes with four pieces of economic data tomorrow morning. The day starts with November's Durable Goods Orders at 8:30 AM ET. This data gives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years such as appliances, airplanes and electronics. Analysts are expecting the report to show a 2.1% rise in new orders. A decline in new orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should help push mortgage rates lower. However, a large jump in orders could lead to mortgage rates moving higher early tomorrow. This data is known to be quite volatile from month-to-month though, so it is not unusual to see large headline numbers in this report.

Next up is November's Personal Income and Outlays data, also at 8:30 AM ET. It will give us an important measurement of consumer ability to spend and current spending habits. Since consumer spending makes up over two-thirds of the U.S. economy, any related data usually has a noticeable impact on the financial markets and mortgage rates. Current forecasts are calling for a 0.4% increase in income and a 0.4% increase in spending. If this report reveals weaker than expected readings, we could see the bond market improve and mortgage rates drop slightly tomorrow morning, especially if the Durable Goods Orders report gives us favorable results also.

The third report of the day tomorrow will be the revised University of Michigan Index of Consumer Sentiment for December at 10:00 AM ET. Current forecasts are calling for a slight increase (97.1 from 96.8), meaning surveyed consumers felt a little better about their own financial and employment situations than they did in November. Bond traders would prefer to see a decline because waning confidence usually means consumers are less likely to make a large purchase in the near future, restricting economic growth.

November's New Home Sales data is the final economic report of the week. This report gives us another measurement of housing sector strength and mortgage credit demand. It is the sister report of yesterday's Existing Home Sales report, but covers a much smaller portion of the housing market than that one does. A weakening housing sector is considered good news for the bond market and mortgage rates because broader economic growth is less likely in the immediate future. Since bonds tend to thrive in weaker economic conditions, a large decline in sales would be considered favorable for bond prices and mortgage rates. Current forecasts are calling for a decline in sales of newly constructed homes. Ideally, we would like to see a large drop in sales.

The bond market will close at 2:00 PM ET tomorrow afternoon ahead of Monday?s Christmas Day holiday and will reopen Tuesday morning. The stock markets are set to be open for a full day of trading tomorrow and closed Monday, although we can expect to see light trading as many traders will be home for the holiday tomorrow also.

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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