Rate Lock Advisory

Wednesday, September 17th

WEDNESDAY AFTERNOON UPDATE:

This week’s FOMC meeting has adjourned with an announcement of a .250 cut to key short-term interest rates, which was expected and their first change since December of last year. Their Dot Plot that is used to predict future rate changes indicates two more similar moves are coming at each of the remaining two meetings this year.

11/32

Bonds

30 yr - 4.07%

84

Dow

45,841

199

NASDAQ

22,134

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Neutral

Federal Open Market Committee (FOMC) Statement

Their revised economic projections showed no major changes with the U.S. unemployment rate being 4.5% at the end of the year and inflation being at 3.1%. Both matched their last predictions that were made in June. The prediction for overall rate of growth in the economy (GDP) was revised from their last estimate of 1.4% to 1.6%, signaling a bit stronger economic activity than previously thought.

Medium

Negative

Fed Talk

The markets had a knee-jerk reaction to the headlines but have since stabilized a little. Stocks are still mixed, but are weaker than this morning’s level with the Dow up 84 points and the Nasdaq down 199 points. The bond market has also responded negatively, currently down 11/32 (4.07%). This is enough of a move from morning pricing levels to cause some intraday upward revisions to mortgage pricing. Unless the bond market rebounds, we should see an increase of approximately .250 of a discount point before the end of the day.

Low

Positive

Housing Starts (New Home Construction)

This morning’s sole economic release was August's Housing Starts report at 8:30 AM ET. It revealed an 8.5% decline in new home groundbreakings. This was a larger than expected decline, pointing to weakness in the new home portion of the housing market. The headline number covers single-family and multi-family homes, such as apartments and condos. Starts of single-family homes that are more relevant to mortgage rates fell 7.0%. Newly issued permits, which help predict future groundbreakings, dropped 2.2%.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow brings us the release of two moderately important pieces of economic data. The 8:30 AM ET report will be last week’s unemployment figures. They are expected to show 240,000 new claims for jobless benefits were made. This would be a good-sized decline from the previous week’s 263,000 initial filings, hinting at strength in the employment sector. Good news for mortgage rates would be a much higher number.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

The Conference Board will close this week’s calendar when they release their Leading Economic Indicators (LEI) for August at 10:00 AM ET tomorrow. This index attempts to predict economic activity over the next three to six months. Forecasts show them slipping 0.1%, meaning the indicators are pointing toward slightly weaker economic activity in the coming months. The larger the decline, the better the news for mortgage pricing.

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... 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.

SouthWind Mortgage, Inc. NMLS #276161

Donald J Cahill Jr 275838 | Cherise D Cahill 275837

1975 Sanburys Way Suite 103
West Palm Beach, FL 33411
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