Tuesday, October 18, 2016 - Article by: James Brooks -
By James Brooks
The bond market is currently down 1/32 (1.77%), which should keep this morning's mortgage rates unchanged from yesterday's early pricing.
September's Consumer Price Index (CPI) was posted at 8:30 AM ET this morning, revealing a 0.3% increase in the overall reading and a 0.1% rise in the more important core data. The overall reading pegged expectations but the core reading was softer than the 0.2% rise that was predicted. This indicates that inflationary pressures, excluding volatile food and energy prices, were a little weaker at the consumer level of the economy than many had thought. That makes the data good news for bonds and mortgage rates.
Tomorrow has two reports scheduled that we will be watching. The first is September's Housing Starts at 8:30 AM ET. This Commerce Department report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show an increase in new home starts between August and September. I believe we need to see a significant surprise in this data for it to have an impact on tomorrow's mortgage rates.
The Federal Reserve will release their Beige Book report tomorrow afternoon. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we may see mortgage rates revise higher as a result.
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
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