Slight Move In Mortgage Rates 2-27-2018

By James Brooks

The bond market is down 4/32 (2.89%), which should push Raleigh Area mortgage rates higher by approximately .125 of a discount point.

January's Durable Goods Orders data was posted at 8:30 AM ET this morning. The Commerce Department announced a 3.7% decline in new orders at U.S. factories for big-ticket products. This was a larger decline than was expected, pointing towards manufacturing sector weakness. Even a secondary reading that excludes orders for more costly and volatile airplanes and other transportation-related equipment came in much lower than predicted. That allows us to consider this data good news for bonds and mortgage rates.

The second release of the morning was February's Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board said their CCI stood at 130.8 this month, up from January?s revised 124.3. The increase means more surveyed consumers felt better about their personal financial situations than did last month. Since rising confidence usually translates into stronger levels of consumer spending, today?s release is bad news for mortgage rates.

Also, new Fed Chairman Jerome Powell is making the Fed?s semi-annual Fed congressional testimony on the status of the economy today. He is speaking to the House Financial Services Committee today and the Senate Banking Committee Thursday. His prepared statement was released prior to his appearance. It indicated that the Fed expects to continue make gradual increases to key short-term interest rates but did not say anything to indicate that they expect to make more than the three increases this year that the markets are predicting. The statement did reference inflation threats though, which wasn?t a surprise. The lack of anything significantly different in the statement prevented much of a reaction in bonds. There still is a chance of seeing a move during the Question and Answer portion of the proceeding, so this event is not over yet.

Tomorrow?s only relevant economic release will be the first of two revisions to the 4th Quarter Gross Domestic Product (GDP) reading at 8:30 AM ET. The GDP is considered the benchmark reading of economic growth or contraction because it is the total sum of all goods and services produced in the U.S. Analysts' forecasts currently call for an annual rate of growth of 2.5%, down slightly from the initial estimate of 2.6% that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing 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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