Slight Movement On Today's Mortgage Rates 9-28-2017

By James Brooks

The bond market is down 4/32 (2.32%), which should push Raleigh area mortgage rates slightly higher.

Yesterday?s 5-year Treasury Note auction went fairly well but not particularly strong. The benchmarks we use pointed towards an average level or slightly better interest in the securities. The bond market weakened a little after the results were posted yesterday. More relevant though is the fact that yesterday?s results and reaction don?t give us much to be optimistic about in today?s 7-year Note sale. Results of today?s auction will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

The first of today's two economic releases was the second revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It showed that the economy grew at a 3.1% annual rate during the April, May and June months. This was a tad stronger than the 3.0% that was estimated last month and what analysts were expecting to see. Because this data is so aged now and traders are much more interested in the current quarter?s growth numbers that will be released next month, the news has not had much of an impact on today?s mortgage pricing.

Today?s other report was last week?s unemployment update that revealed 272,000 new claims for unemployment benefits were filed last week, up from the previous week?s revised 260,000 initial filings and short of the 275,000 that was expected. This was somewhat good news for bonds and mortgage rates because rising claims is a sign of employment sector weakness. However, the fact that these figures still may be skewed from the storms has erased the little importance that they normally carry as only a weekly update. In other words, a non-factor in today?s trading.

Tomorrow beings us two more pieces of data that may influence mortgage rates. The first is August's Personal Income and Outlays at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. This is relevant to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. That is negative news for mortgage rates because bonds tend to thrive in weaker economic conditions. It is expected to show an increase of 0.2% in income and a 0.1% rise in spending. If we see weaker than expected readings, the bond market should react positively, leading to lower mortgage rates tomorrow.

The second report of the day is the University of Michigan's revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed a 95.1 reading. Analysts are expecting to see a slight upward revision, meaning consumer confidence was a bit stronger than previously thought. Waning confidence is good news for bonds because consumers that are concerned about their own financial and employment situations are less likely to make a large purchase in the near future, limiting economic growth. Therefore, a lower than expected reading would be favorable news for bonds and should help improve mortgage rates.

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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