Rate Lock Advisory

Friday, December 9th

Friday’s bond market has opened well in negative territory following unfavorable economic news. The major stock indexes are mixed at the moment with the Dow down 36 points and the Nasdaq up 1 point. The bond market is currently down 17/32 (3.55%), which should push this morning’s mortgage rates higher by approximately .250 of a discount point.

17/32

Bonds

30 yr - 3.55%

36

Dow

33,744

1

NASDAQ

11,082

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Negative

Producer Price Index (PPI)

This morning’s inflation data was November's Producer Price Index (PPI) that revealed a 0.3% rise in the overall reading and a 0.4% increase in the core data. Both readings exceeded forecasts of up 0.2% for each, signaling inflationary pressures at the manufacturing level of the economy were stronger than expected. The stronger monthly readings also bumped the year over year numbers higher than predicted. Since rising inflation makes long-term securities, such as mortgage bonds more attractive to investors, these readings were bad news for mortgage rates.

Medium

Negative

Univ of Mich Consumer Sentiment (Prelim)

December's preliminary reading to the University of Michigan's Index of Consumer Sentiment was posted at 10:00 AM ET. They announced a reading of 59.1, up from November’s 56.8 and higher than expectations. The increase means surveyed consumers were more optimistic about their own financial situations than they were last month and are likely to make a large purchase in the near future. Because consumer spending makes up over two-thirds of the U.S. economy, we have to label this report bad news for bonds and mortgage rates.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Next week has plenty scheduled that is expected to influence mortgage rates with major events taking place three of the five days. It will start with no data Monday morning but the 10-year Treasury Note auction results will be announced early afternoon. Data starts Tuesday morning with the extremely important Consumer Price Index, followed by another Thursday morning when Retail Sales figures are posted. Between those two is the FOMC meeting adjournment that will include revised economic projections from the Fed and another auction. It is safe to assume that it will be a very active week for bonds and mortgage rates. Look for details on the entire calendar in Sunday evening’s weekly preview.

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... Lock if my closing was taking place between 21 and 60 days... Lock 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.

Michael Skovron PA Skovron Group

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