Surprise News Help Improve Mortgage Rates 12-14-2017

By James Brooks

The bond market is down 4/32 (2.35%), but we still should see a slight improvement in Raleigh area mortgage rates due to strength late yesterday.

Both of this morning?s economic releases gave us unfavorable results, helping to fuel the early selling. The big news was November?s Retail sales report that showed a 0.8% jump in consumer spending. That was well above the 0.3% that was forecasted, meaning consumers spent much more last month than many had thought. Even a secondary reading that excludes more costly and volatile auto transactions came in much stronger than expected (+1.0% vs +0.6%). And if that wasn?t enough, October?s sales figures were revised higher by 0.3%. Because consumer spending makes up a significant portion of the U.S. economy, today?s readings are clearly negative for the bond market and mortgage rates.

The second release of the morning was last week's unemployment figures, also at 8:30 AM ET. They showed that 225,000 new claims for unemployment benefits were filed last week. That was a decline from the previous week?s 236,000 initial filings and lower than the 239,000 that was expected. Because declining claims points to a stronger employment sector, this was also bad news for mortgage pricing.

Tomorrow has a single moderately important economic report for the markets to digest. November's Industrial Production data will be posted at 9:15 AM ET tomorrow. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts are calling for a 0.3% rise in output, indicating modest manufacturing sector strength. A decline would be good news for bonds, while a stronger reading would show manufacturing strength and be considered bad news for 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... 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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