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James Brooks

Mortgage Rates Moving Higher On Today's News 1-18-2017

Wednesday, January 18, 2017 - Article by: James Brooks - Message

By James Brooks

The bond market is down 26/32 (2.42%), which should push today's mortgage rates higher by .375 of a discount point.

December's Consumer Price Index (CPI) kicked off today's calendar at 8:30 AM. It showed a 0.3% increase in the overall reading and a 0.2% rise in the core data that excludes volatile food and energy prices. These readings pegged expectations and indicate inflation rose moderately at the consumer level of the economy last month. Since the report showed no major surprises, we can consider the data to be neutral-to-slightly negative for bonds and mortgage rates.

The second report of the day was December's Industrial Production data at 9:15 AM ET. It revealed a 0.8% rise in output at U.S. factories, mines and utilities. That was a little stronger than the 0.6% that was expected, indicating manufacturing sector strength. Therefore, we can consider the data negative for bonds and mortgage rates.

We also have the Federal Reserve's Beige Book release at 2:00 PM ET to watch. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. Of particular interest is information regarding inflation, unemployment or future hiring. If there is a reaction to the report, it will come during mid-afternoon trading.

Tomorrow has two 8:30 AM ET economic reports being posted, but neither are considered to be highly important. The first will be last week's unemployment figures. They are expected to show that 252,000 new claims for unemployment benefits were filed last week, up from the previous week's 247,000. The larger the number of claims, the better the news it is for bonds and mortgage rates because rising claims is a sign of a softening employment sector. However, this is only a weekly snapshot of the sector, so its influence on mortgage rates is often weak unless it shows a significant variance from forecasts.

December's Housing Starts will also be posted early tomorrow. It helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don't see it causing much movement in mortgage rates but does carry the potential to affect them slightly if it shows a significant surprise. Analysts are expecting to see an increase in new home starts between November and December.

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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