Small Increase In Mortgage Rates 4-12-2018

By James Brooks

The bond market is down 12/32 (2.81%), which should push Raleigh Area mortgage rates to increase by approximately .125 of
a discount point.

Yesterday’s 10-year Treasury Note auction went relatively well but not overly strong. Some of the benchmarks that we use
to gauge investor demand indicated an elevated interest while others contradicted. The bond market had a slight negative
reaction when the results were posted. However, it was not enough of a move to cause a change in mortgage rates. We have a
similar event today with the 30-year Bond auction. If the sale draws a strong investor interest, we could see gains lead
to a minor improvement to mortgage rates shortly after results are posted at 1:00 PM ET today. On the other hand, a weak
demand could have an opposite impact on rates.

Also yesterday afternoon was the release of the minutes from the last FOMC meeting that didn’t show any major surprises.
The key points worth addressing are the fact that all voting members feel inflation will rise in the near future (bad news
for bonds and mortgage rates), but their current expectations should not affect the Fed’s current plan for rate hikes.
They also feel economic growth has strengthened recently, although, potential retaliatory trade actions against the U.S.
is a risk to future economic growth. The net impact the minutes had on mortgage rates was nearly zilch. We saw no movement
in mortgage bonds, meaning few intraday rate changes should have come from them.

Today’s only economic data was last week’s unemployment figures at 8:30 AM ET. They showed that 233,000 new claims for
unemployment benefits were made last week, down from the previous week’s 242,000 initial filings. This was a little higher
than the 230,000 that was expected. Therefore, we can consider the data slightly favorable for mortgage rates.
Unfortunately, this is only a weekly snapshot with a minor variance from forecasts, so we have seen little reaction to the

Tomorrow has only one moderately important economic release that may affect mortgage rates. That would be the University
of Michigan's Index of Consumer Sentiment at 10:00 AM ET. This index will give us an indication of consumer confidence,
which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases.
But, if they are growing more concerned of their personal financial or employment situations, they probably will delay
making that purchase. This influences future consumer spending data and can have a moderate impact on the financial
markets. Good news would be a sizable decline from March's 101.4 reading. Current forecasts are calling for a reading of
approximately 100.8.

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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