Slight Increase In Mortgage Rates 3-20-2018

By James Brooks

The bond market is down 8/32 (2.88%), which should push Raleigh Area mortgage rates to increase by approximately .125 of a discount point.

There is no relevant economic data set for release today. The first report of the week will come at 10:00 AM ET tomorrow when February's Existing Home Sales report is posted by the National Association of Realtors. It will give us a measurement of housing sector strength and mortgage credit demand. It is expected to reveal an increase in home resales, meaning the housing sector strengthened last month. Ideally, bond traders would prefer to see a large decline in sales, pointing towards a rapidly weakening housing sector. Bad news would be a sizable increase in sales, indicating that the housing sector is gaining momentum. That could be troublesome for the bond market and mortgage rates because housing strength makes broader economic growth more likely.

Tomorrow also has a couple Fed events scheduled that are very important to the financial and mortgage markets. They start with the adjournment of the two-day FOMC meeting that begins today. There is a pretty wide consensus that new Fed Chairman Jerome Powell and friends will raise key short-term rates by a quarter point at this meeting. Since the move won?t come as much of a surprise if they do act, market participants will be focused on the Fed?s timetable for future rate hikes. The markets are currently expecting them to make three bumps this year, including this week?s. If the post-meeting statement gives any hints of a fourth rate hike this year, expect the bond market to react negatively and mortgage rates to spike higher.

The FOMC meeting will adjourn at 2:00 PM ET, which is when the statement will be released. That is also when we will get the Fed's updated economic projections. Those events will be followed by a press conference by Chairman Powell at 2:30 PM, his first as head of the Fed. There is a high probability of seeing an active afternoon in the financial and mortgage markets tomorrow.

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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