Rate Lock Advisory

Wednesday, June 18th

WEDNESDAY AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with an announcement that there were no changes made to key short-term interest rates, as was widely expected. This was the fourth consecutive meeting since the Fed last cut rates in December of last year. The dot plot from this meeting that estimates future monetary policy moves indicates the Fed is still expecting to make two rate cuts before the end of the year despite the tariff-fueled uncertainty about inflation and economic growth. One quote in the post-meeting statement sums it up: “Uncertainty about the economic outlook has diminished, but remains elevated. The less uncertainty than they had when revisions were last posted in March is what makes two more rake hikes this year a possibility.

4/32

Bonds

30 yr - 4.39%

27

Dow

42,188

26

NASDAQ

19,545

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Neutral

Misc Fed

This meeting also included revised economic projections from the Fed. They now see inflation at 3.0% this year, up from the previous estimate of 2.7%. The unemployment rate is now predicted to be at 4.5% at the end of this year when they said 4.4% previously. Finally, overall Gross Domestic Product (GDP) growth was revised from a 1.7% annual rate to 1.4%, meaning the economy will be weaker than they thought earlier in the year. The upward revision to inflation is bad news for bonds and mortgage rates while the other two are considered to be favorable.

Low

Negative

None

Overall, there was good news and bad news from the Fed. The reaction in the markets has been muted. The Dow has given up this morning’s gains and is now down 27 points. The Nasdaq is still in positive ground, but only by 26 points. The bond market is currently down 4/32 (4.39%), which is enough of a change from this morning to cause some lenders to revise mortgage pricing slightly higher. Others will wait for the end of the press conference with Chairman Powell to end before deciding to make a change or not.

Low

Positive

Housing Starts (New Home Construction)

Earlier today, May's Housing Starts report showed groundbreakings of new residential housing plunged 9.8% last month. This was much softer than many analysts had predicted. However, the large drop is mostly a result of weaker multi-family starts, such as apartments and condos. New groundbreakings of single-family homes rose 0.4%. That said, newly issued permits that give us an indication of future single-family home starts fell 2.7%, meaning new starts are likely to be soft next month. Accordingly, we are labeling the report slightly favorable for bonds and mortgage rates.

Medium

Neutral

Weekly Unemployment Claims (every Thursday)

We also got last week’s unemployment update early this morning instead of the traditional Thursday release due to tomorrow’s holiday. It revealed 245,000 new claims for jobless benefits were made last week. This was a decline from the previous week’s upwardly revised 250,000 filings, but was close to expectations. Technically, the decline is bad news for bonds because it is a sign of strength in the employment sector. However, the upward revision to the previous week’s number allows us to label the report neutral for mortgage rates.

Low

Neutral

Holiday Schedule

The U.S. financial markets will be closed tomorrow for the Juneteenth holiday and will reopen for regular trading hours Friday morning. There is no early closing today ahead of this holiday. Because this is just a single-day closing, it shouldn’t have an influence on bond trading like we sometimes see before extended holiday weekends.

---

Unknown

none

Since there is no relevant economic data coming tomorrow and the U.S. financial markets will be closed, there will be no update to this report tomorrow morning.

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.

Sunrise Real Estate Group Broker/Owner B. S. Law

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