Slight Change In Mortgage Rates 9-26-2017

By James Brooks

The bond market is currently down 2/32 (2.24%), but strength late yesterday should improve Raleigh area mortgage rates slightly.

This morning had two relatively minor pieces of economic data posted. The first was August's New Home Sales at 10:00 AM ET that showed sales of newly constructed homes fell 3.4% last month. That size of a decline is due to an upward revision to July?s sales, but the number of transactions was still below expectations before the revision is applied. That makes the data good news for bonds and mortgage rates.

September's Consumer Confidence Index (CCI) was also posted at 10:00 AM ET, revealing a reading of 119.8 that was a bit stronger than the 199.4 that was expected. That variance isn?t enough to bring much attention. What makes the data negative actually, is a revision to August?s reading. It was revised down from 122.9 to 120.4. Analysts were originally expecting to see this month?s reading fall 3.5 points, but the revision makes the decline much smaller. Therefore, we can consider the data neutral to slightly negative for bonds and mortgage rates.

Tomorrow has an important morning report scheduled along with an afternoon event that has the potential to affect rates slightly. August's Durable Goods Orders will be posted at 8:30 AM ET, which is the week's most important report. It gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Big-ticket products are items that are expected to last three or more years such as electronics and appliances. Analysts are expecting to see a 0.7% increase in new orders, indicating growth in the manufacturing sector. A decline should help boost bond prices and cause mortgage rates to drop tomorrow because signs of economic weakness make longer-term securities more appealing to investors. However, a larger increase in new orders would indicate a stronger than expected manufacturing sector that will likely help push mortgage rates higher. It is worth noting that this data is known to be quite volatile from month-to-month, so a slight or moderate variance may not affect mortgage pricing.

The Treasury will sell 5-year Notes tomorrow and 7-year Notes Thursday. They will tell us if there is an appetite in the markets for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET each day, so any reaction will come during afternoon trading tomorrow and/or Thursday.

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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