Rate Lock Advisory

Wednesday, June 14th

WEDNESDAY AFTERNOON UPDATE: This week’s FOMC meeting has adjourned with an announcement of no change to key short-term interest rates, the first time since January of last year. This didn’t come as a complete surprise to the markets, but there were a couple of points from the meeting that were not expected. The most glaring are the predictions of future rate increases. They show a majority of Fed members are expecting two more quarter-point bumps this year before lowering rates next year by an estimated 1.00%. That would leave key rates higher at the end of both 2023 and 2024 higher than previously thought.

6/32

Bonds

30 yr - 3.80%

173

Dow

34,038

53

NASDAQ

13,626

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

Misc Fed

The revised economic projections haven’t helped afternoon trading either. They now see inflation, employment and overall economic growth all to be stronger at the end of this year than they previously thought.

Medium

Negative

None

The markets have not responded as much as we had expected. Stocks are still mixed with the Dow now down 173 points compared to the 89-point loss at the time of this morning’s update. The Nasdaq is currently up 53 points, extending the 15-point gain from earlier. The bond market is now up 6/32 (3.80%). This is enough of a move from this morning to cause some lenders to revise pricing higher by approximately .125 of a discount point. Others may wait until tomorrow’s data before reflecting this change.

High

Unknown

Producer Price Index (PPI)

This morning’s sole relevant economic release was another important inflation reading. May’s Producer Price Index (PPI) showed a 0.3% decline in the overall reading and a 0.2% rise in core data. The overall reading was weaker than the 0.1% decline that was expected and brought the year-over-year reading lower for the 11th consecutive month. The more important core reading that excludes volatile food and energy costs matched forecasts. Because this is another indication that inflation is trending lower, we can consider the report good news for bonds and mortgage rates.

High

Unknown

Retail Sales

Tomorrow has three economic releases that we will be watching, starting with the highly important Retail Sales report for May at 8:30 AM ET. Consumer spending makes up over two-thirds of the U.S. economy, so related data is watched closely by market participants. Analysts are expecting sales to show little change from April’s level. A decline would be good news for bonds and mortgage rates as it would be a sign of economic weakness. On the other hand, if we see stronger sales, we should expect bond weakness and an increase in mortgage rates tomorrow morning.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

We will also get last week’s unemployment figures early tomorrow morning. They are expected to show 251,000 new claims for benefits were filed last week, down from the previous week. Rising claims are a sign of employment sector weakness, making an unexpected increase in initial filings good news for bonds and mortgage pricing.

Medium

Unknown

Industrial Production

Tomorrow also has May's Industrial Production data set for release at 9:15 AM ET. It will give us an indication of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. This report is considered to be only moderately important to mortgage rates and should require a sizable variance from forecasts for it to influence mortgage rates. Expectations are for a 0.1% increase from April's production. A decline would be favorable news for mortgage pricing, but the sales data will draw much more attention than this report will.

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.

Kiva Realty

620 West First Street,
Portales, NM 88130
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