Rate Lock Advisory

Wednesday, September 16th

WEDNESDAY AFTERNOON’S UPDATE:

This week’s FOMC meeting has adjourned with an announcement of a quarter-point hike to key short-term interest rates in their first step to bring down inflation. This was the first increase to these rates since 2023, but was widely expected after oil prices and inflation have risen since the start of the Iran war. The vote to make the move was unanimous after seeing dissenting votes in several of the recent meetings that left key rates unchanged.

3/32

Bonds

30 yr - 4.99%

748

Dow

51,344

119

NASDAQ

25,862

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Neutral

Misc Fed

The Fed also revised their economic projections during the meeting. Drawing the most attention is the dot plot that shows individual members are predicting there will be one more rate hike before the end of the year. The two remaining FOMC meetings are set for Oct and December. They also have revised their inflation predictions higher by 0.1%, now expecting the overall PCE index to be 3.7% and the core reading at 3.4% at the end of the year. Another headline number they revised was the unemployment rate that they previously thought would end the year at 4.3%. It now stands at 4.1%, meaning they feel the employment sector would be a bit better than previously thought.

Medium

Negative

Misc Fed

The markets have not responded favorably to the news. Apparently traders were hoping to see more in the messaging that we actually got. The quarter-point increase was already built into this morning’s early gains and with little reason to extend them, we are seeing most of the major indexes lose ground from this morning. The Dow is now down 748 points while the Nasdaq has given back its’ morning gains to currently stand down 119 points. The bond market is up only 3/32 (4.99%), which is enough of a move for some lenders to revise mortgage pricing higher by approximately .125 - .250 of a discount point.

High

Negative

Retail Sales

Today’s activities actually began this morning with the release of August's Retail Sales report at 8:30 AM ET. The 1.2% rise in retail-level spending was well above the 0.8% that was expected, indicating consumers spent much more than thought. Furthermore, a secondary reading that excludes more volatile and costly auto transactions jumped 1.4% when it was predicted to be up 0.5%. These numbers indicate consumers weren’t afraid to spend last month, making the report bad news for mortgage rates because stronger consumer spending fuels economic growth.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

There are two moderately important economic reports set for release early tomorrow morning. One is last week’s unemployment update that is expected to show 208,000 new claims for jobless benefits were filed. This would be a small increase from the previous week’s 206,000. Rising claims are a sign of weakness in the employment sector, so favorable news for mortgage rates would be a larger number of new filings.

Low

Unknown

Housing Starts (New Home Construction)

August's Housing Starts report will be tomorrow’s second release, also at 8:30 AM ET. This report will probably not have a heavy impact on the bond market or mortgage rates. It helps us measure housing sector strength and future mortgage credit demand by tracking new home groundbreakings. It is expected to show new home groundbreakings rose a little from July, pointing to a bit of strength in the new home portion of the housing sector. We need to see a significant surprise in this data for it to have a noticeable influence on mortgage rates.

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.