Rate Lock Advisory

Wednesday, September 20th

WEDNESDAY’S AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with the Fed leaving key short-term interest rates unchanged. This was widely expected, as was the signal from Chairman Powell that one more hike is likely before the end of the year. The only surprise that stands out is next year’s rate activity that was previously expected to have key rates lower by 1.0% to manage the so-called soft landing for the economy. Today’s meeting brought a revision that now has rate cuts totaling 0.5%, meaning short-term rates may remain higher than expected for a longer period of time.

4/32

Bonds

30 yr - 4.34%

145

Dow

34,663

57

NASDAQ

13,620

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

High

Negative

Federal Open Market Committee (FOMC) Statement

This meeting included revised economic projections also. They have lowered their year-end predictions for inflation by 0.2%, which is good news for rates. However, they also lowered their outlook for the unemployment rate and upped the Gross Domestic Product (GDP) reading for this year. The latter two can be considered bad news for bonds and mortgage rates.

Medium

Negative

None

The markets have had somewhat of a subdued reaction to the headlines. Bonds had already slipped from morning highs before the adjournment but appear to be slowly giving up more ground. It is currently up 4/32 (4.34%), which may be enough of a move for some lenders to revise rates a little higher than this morning’s pricing. If bond prices continue to slide (pushing yields higher), we may see more profound upward revisions to mortgage rates before the end of the day. Stocks are having a mixed reaction with the Dow not far off from morning levels, currently up 145 points but the Nasdaq is now down 57 points.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow has three pieces of moderately important economic data scheduled for release. Last week’s unemployment figures are expected to show 220,000 new claims for benefits, down from the previous week’s 225,000. The higher the number of initial filings, the better the news it is for mortgage rates since rising claims is a sign of weakness in the employment sector.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

August's Existing Home Sales report will be posted at 10:00 AM ET tomorrow, giving us some insight into the housing sector. The National Association of Realtors is expected to announce that the number of home resales in the U.S. rose a little last month, indicating strength in the housing sector. Good news for rates would be a large decline in sales. Since this report carries only a medium level of importance, it will take a wide variance from forecasts for it to cause a noticeable change in rates.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

August’s Leading Economic Indicators (LEI) is the third report of the day. This Conference Board index attempts to predict economic activity over the next three to six months. It is expected to show a 0.4% decline. An increase would be considered negative news for bonds and mortgage pricing since a stronger economy makes long-term securities, such as mortgage bonds, less appealing to investors.

Float / Lock Recommendation

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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

RTC Mortgage Corporation

1000 N. Coast Highway, #7
Laguna Beach, CA 92651
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NMLS: 288939 BRE: 01117142



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