20 Nov 2023
By divfundposts

What’s Ahead For Mortgage Rates This Week – November 20, 2023

Financial Reports

With the release of the CPI and PPI data, much of the broader market has been anticipating the potential cooling of inflation numbers month-to-month and those expectations have been met. There’s a consistent trend of inflation slowing down which brings a greater potential for the end of any rate hikes from the Federal Reserve, signaling a soft-landing for the economy which has been touted by Jerome Powell. With a soft landing, it does also signal a strong potential for the Federal Reserve to begin lowering rates in the coming future. 

Consumer Price Index

Despite the report beating inflation expectations and leading to optimistic outcomes for a future soft-landing for the economy, there is still plenty to be cautious about with the reports also signaling the largest reduction was due to the price of gasoline declining significantly from the prior month. The overall cost of living has remained stable and not increased, but there is still plenty to look out for with the coming reports.

  •  The consumer price index was flat in October from the previous month but increased 3.2% from a year ago.
  •   Excluding volatile food and energy prices, the core CPI rose 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual rate was the smallest increase since September 2021.
  • The flat reading on the headline CPI came as energy prices declined 2.5% for the month, offsetting a 0.3% increase in the food index.

Producer Price Index
The Producer Price Index for final demand fell 0.5 percent in October, seasonally adjusted, after advancing 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. (See Table A). The October decline is the largest decrease in final demand prices since a 1.2-percent drop in April 2020. On an unadjusted basis, the index for final demand rose 1.3 percent for the 12 months ended in October.

Primary Mortgage Market Survey Index
The last 3 weeks have seen a week-to-week decline in rates.

  •     15-Yr FRM rates seeing a week-to-week decrease by -0.05% with the current rate at 6.76%.
  •     30-Yr FRM rates seeing a week-to-week decrease by -0.06% with the current rate at 7.44%

MND Rate Index

  •    30-Yr FHA rates increased week to week seeing a -0.21% increase for this week. Current rates at 6.70%
  •   30-Yr VA  rates increased week to week seeing a -0.02% increase for this week. Current rates at 6.72%

Jobless Claims
Weekly jobless claims have exceeded expectations this week, with it showing a slight uptrend. Initial Claims have increased to 231,000 compared to the expected claims of 220,000. The prior week was 218,000. 

What’s Ahead
Thanksgiving week, being next week will see a reduction in the data release schedule. The largest ones will be U.S. leading economic indicator reports, with the usual initial jobless claims, and lastly the final consumer sentiment report for the quarter.

09 Nov 2023
By Kevin Gahagan
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Mortgage Rate Locks: When and How to Secure a Favorable Rate

Mortgage

Securing a mortgage to purchase your dream home is a significant financial decision. One of the essential aspects of this process is locking in a favorable mortgage rate. A mortgage rate lock ensures that the interest rate on your loan remains the same for a specified period, protecting you from potential rate fluctuations. We will explore when it’s best to lock in a mortgage rate and provide a step-by-step guide on how to do it.

When to Lock in Your Mortgage Rate

The perfect time to lock in your mortgage rate depends on various factors, and it’s not an exact science. Here are some key considerations to keep in mind:

Market Trends: Pay attention to the current economic climate and interest rate trends. If rates are historically low, it may be a good time to lock in a rate.

Your Financial Situation: Analyze your financial stability. If you’re comfortable with the offered rate and have a steady income, it might be a good time to lock it in.

Closing Timeline: Consider your closing timeline. A longer period before closing may justify an earlier rate lock to protect against potential rate increases.

Personal Comfort: Ultimately, your peace of mind is crucial. If you’re satisfied with the rate and don’t want to worry about future fluctuations, locking in the rate early can provide peace of mind.

Steps to Secure a Favorable Mortgage Rate

Locking in a mortgage rate involves a few straightforward steps. Here’s a simple guide to help you through the process:

Choose Your Lender: Start by selecting a reputable lender. It’s essential to work with a lender you trust and feel comfortable with.

Discuss Rate Lock Options: Speak with your lender about rate lock options. They will provide you with details on available rates and terms.

Decide on the Lock Period: Determine how long you need the rate lock. Common lock periods are 15, 30, 45, or 60 days, but some lenders offer longer periods.

Request a Rate Lock Agreement: Your lender will provide a rate lock agreement that outlines the terms and conditions, including the locked rate, expiration date, and any associated costs.

Lock the Rate: Once you’re satisfied with the terms, sign the rate lock agreement. This action locks in your mortgage rate for the agreed-upon period.

Monitor the Expiration Date: Keep track of the rate lock’s expiration date. If your mortgage doesn’t close before this date, you may need to discuss an extension or accept the prevailing rate.

Keep Your Finances Stable: Maintain your financial stability during the rate lock period. Any changes in your financial situation could have an impact on your mortgage approval.

Locking in a favorable mortgage rate is a crucial step in securing your home loan. By considering market conditions, your financial stability, and your personal comfort, you can make an informed decision on when to lock your rate. The steps involved in securing a rate lock are relatively straightforward, and your lender will guide you through the process. Ultimately, a rate lock provides peace of mind, ensuring that your interest rate remains consistent, regardless of market fluctuations.

06 Nov 2023
By Kevin Gahagan
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What’s Ahead For Mortgage Rates This Week – November 6, 2023

Financial Reports

The most important data of the quarter was released, signaling the direction for many markets and where economic policy may be headed. Jerome Powell as well as other members of the Federal Reserve spoke about the state of economic policy, informing many parties about their decisions to remain hawkish or dovish in their approach. Further rate hikes could tell a story that inflation is not yet under control and the Federal Reserve feels the need to continue these rate hikes, which will have a significant impact on the lending markets as a whole.

FOMC Rate Decision
While Fed Chair Jerome Powell emphasized uncertainty over whether the Fed has tightened enough to bring down inflation, skeptics still believe policymakers have finished hiking rates. Jerome Powell had several opportunities to make his intentions clear about further rate hikes but had passed on most of them. Analysts largely agree that their recent dovish approach is signaling the end of rate hikes.

  • Central bank’s policy rate remains in the 5.25%-5.50% range.
  • The Fed says the economy grew at a ‘strong’ pace in the third quarter.

Key point: Two rate decision meetings without a hike may signal a period in which the economy shows the reduction in inflation the FED has been seeking, and relief in interest rates for lending parties.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates seeing a week-to-week increase by 00% with the current rate at 7.03%.
  • 30-Yr FRM rates seeing a week-to-week decrease by -0.03% with the current rate at 76%

MND Rate Index

  • 30-Yr FHA rates increased week to week seeing a -0.61% decrease for this week. Current rates at 71%
  • 30-Yr VA rates increased week to week seeing a -0.63% decrease for this week. Current rates at 70%

Nonfarm Payrolls
Nonfarm Payrolls measure the change in the number of people employed during the previous month, excluding the farming industry.

  • Nonfarm payrolls increased by 150,000 for the month, against the consensus forecast for a rise of 170,000. That was a sharp decline from the gain of 297,000 in September.

 Job Claims
The weekly jobless claims report from the Labor Department on Thursday showed unemployment rolls rising to a six-month high.

Initial Claims have increased by 217,000 compared to the expected claims of 214,000. The prior week was 211,000.

ISM Manufacturing Data
ISM Manufacturing Data was released this week, much of it impacting many sectors including manufacturing, home building, and commercial building. The Institute for Supply Management’s manufacturing survey rose to 49.0% last month from 47.8% in August. It was the third straight increase, and the index matched a 10-month high.

  • Production barometer increased 2.5 points to 52.5% and was positive for the second month in a row.
  • The prices index, a measure of inflation, fell 4.6 points to a fairly low 43.8%. Higher oil prices in the future may impact this statistic.
  • The index of new orders rose 2.4 points to 49.2%. So far the auto industry strike has had little impact.

What’s Ahead
We’ll have a relatively light week after the FOMC rate decision meetings and manufacturing release, with the only notable economic reports being Consumer Credit and Wholesale Inventories.

30 Oct 2023
By Kevin Gahagan
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What’s Ahead For Mortgage Rates This Week – October 30, 2023

Financial Reports

This week’s most significant data offered preliminary numbers for manufacturing and services PMI (Purchasing Managers Index). Both can serve as a forward indicator for the economy while providing insight into the current state of the cost of living for the service industry. While manufacturing met an expected rise for the end of October, services saw a contraction, falling to 46.6 from 49.3. Readings below 50.0 can be a sign of a downturn for the economy, particularly given the time of the year.

Mortgage Applications & Rates Indices
MBA Mortgage Applications Index saw a reduction of -1.0% in applications for the week, with rates once again increasing again week over week.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates are seeing a week-to-week increase by 0.11% with the current rate at 03%.
  • 30-Yr FRM rates are seeing a week-to-week increase by 0.16% with the current rate at 79%

MND Rate Index

  • 30-Yr FHA rates increased week to week with a -0.08% decrease for this week. Current rates at 32%
  • 30-Yr VA rates increased week to week with a -0.11% decrease for this week. Current rates at 33%

Personal Income & Spending

Personal income increased $77.8 billion (0.3 percent at a monthly rate) in September, according to estimates released today by the Bureau of Economic Analysis (table 2 and table 3). Disposable personal income (DPI), which is personal income less personal current taxes, increased $56.1 billion (0.3 percent), and personal consumption expenditures (PCE) increased $138.7 billion (0.7 percent).

  • The PCE price index increased 0.4 percent.
  • Excluding food and energy, the PCE price index increased 0.3 percent.

Key point: Personal income increased in September and spending accordingly rose, moving into October. This increase in income and spending is expected moving into the Holiday season. This is a strong sign for the Advanced GDP numbers for the remainder of the year.

Job Claims
Those who applied for unemployment benefits last week fell to a nine-month low of 188,000, subverting expectations that layoffs would rise as the U.S. interest rates continued to increase.
Initial Claims were 210,000 compared to the expected claims of 210,000. The prior week was at 211,000.

What’s Ahead
This week’s scheduled economic reports include ISM manufacturing data, S&P U.S. Manufacturing PMI, and Job Openings. The stronger data points of U.S. non-farm payrolls are coming at the end of the week on Friday.

23 Oct 2023
By Kevin Gahagan
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What’s Ahead For Mortgage Rates This Week – October 23, 2023

Financial Reports

This week featured the usual retail sales report which shows consumer demand and as well as an indicator of the velocity of money, not only for consumers but business to business as well. An increase would show an increase in national and local increase in economic activity, which is important as we move into Q4 of the year; where the holiday season is expected to see an increase in consumer activity.

Retail Sales
Retail sales have exceeded expectations this month showing month-to-month increases across the board:

  • Retail sales are up 0.7% from the previous month with an expected increase of 0.3%.
  • Retail sales with auto removed show an increase of 0.6% compared to an expected 0.2% increase.
  • Business inventories are also above the expected increase at 0.4% compared to 0.3%.

Housing Starts & Building Permits
U.S. Housing Starts rebound in September in September after a sharp drop in the prior month. Largely, economists are feeling that builders have been losing confidence since rates have peaked over 7% and housing is expected to trend lower until the end of the year.

  • Construction of new U.S. homes rebounded 7% in September to an annual pace of 1.36 million units after a sharp 1.5% drop in the prior month, the Commerce Department said Wednesday.
  • Building permits, a sign of future construction, fell 4.4% to a 1.47 million rate.
  • Existing home sales beat expected sales with 3.98 million sales compared to the expected 3.90 million sales.

Key point: The pace of construction for single-family homes in September has risen by 3.2% and apartment building construction rose by 17.1%

Mortgage Applications Increased for the Month of October
MBA Mortgage Applications Increase, a measure of mortgage loan application volume again.
Primary Mortgage Market Survey Index

  • 15-Yr FRM rates seeing a week-to-week increase by 0.03% with the rates now at 92%.
  • 30-Yr FRM rates seeing a week-to-week increase by 0.06% with the current rate at 63%

MND Rate Index

  • 30-Yr FHA rates increased week to week seeing a 0.28% basis point increase. Current rates at 40%
  • 30-Yr VA rates increased week to week seeing a 0.30% basis point increase. Current rates at 44%

Job Claims
Those who applied for unemployment benefits last week fell to a nine-month low of 188,000, subverting expectations that layoffs would rise as the U.S. interest rates continued to increase.

Initial Claims were 188,000 compared to the expected claims of 211,000. The prior month was 211,000.

What’s Ahead
This week’s scheduled economic reports include PMI data, along with new home sales. There will also be a national GDP data release which can give an indication of the growth of markets and economy as a whole. Lastly, Personal Income and Spending will be at the tail of the week along with PCE Index numbers.