March 8th, 2024 4:18 PM by T. Fanning
Hello, happy Friday,
This week was eagerly awaited release of significant economic data—the first major batch since the February 13th Inflation report. The data this week turned out to be more favorable, but all eyes are now on next week’s data, which is even more critical. Interest rates concluded the week with a nice drop. Next week has several highly important economic reports scheduled for release in addition to a couple of Treasury auctions that are usually more influential than other sales. The list of economic reports includes two inflation readings (CPI and PPI) and key consumer spending data. The releases that are expected to heavily impact mortgage rates are set for Tuesday and Thursday. The week starts light with nothing scheduled for Monday that we need to be concerned about.*
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); Conventional, FHA and VA 1x Close Construction-Perm; 1.50% Down FHA Advantage Program; CHFA Financing; HomeStyle renovation program; and a Jumbo, 5% down program. We can also do non-traditional programs! To see a detailed list of programs, visit our website: www.homeloanmortgageco.com/mortgageprograms
Last Updated: 3/8/24
Friday's bond market has opened in positive territory following a flutter of employment-related headlines. Stocks are reacting favorably to the same data, pushing the Dow higher by 131 points and Nasdaq up 155 points. The bond market is currently up 5/32 (4.06%), which should improve this morning's mortgage rates by approximately .250 of a discount point if compared to Thursday's early pricing.
This morning's major economic release was February's Employment report at 8:30 AM ET. It gave us a boatload of mixed figures and revisions that are still being digested. Good news came in a sizable revision to January's blowout payroll number that surprised nearly everyone at that time. We were told last month that 353,000 new jobs were added to the economy in January, but that number has now been revised down to 229,000. The new January payroll number is still higher than the 175,000 that was expected when the report was posted early last month and would have also been considered bad news for bonds and mortgage rates, albeit with a much softer impact on both.
The report also showed more jobs were added last month than was expected. February's payroll number was up 275,000, well above the 195,000 that was expected. Despite the big revision to January, numbers of 229,000 and 275,000 in new jobs is sign of strength in the employment sector that is bad news for mortgage rates and makes it harder for the Fed to start lowering key short-term interest rates soon.
Today's good news wasn't isolated to just January's revised payroll number. Although, average earnings were revised slightly lower than previously announced for January on a monthly and year-over-year basis. Furthermore, February's average earnings rose only 0.1% when it was predicted to rise 0.3%. Higher earnings are an inflation concern because businesses need to raise the cost of their products or services to help cover the increase. It also puts more money into the pockets of workers, allowing them to spend more. Furthermore, inflationary pressures cause the Fed to keep key short-term rates higher for longer.
Another piece of good news came in the February unemployment rate that moved from 3.7% in January to 3.9% last month. This was the highest unemployment rate since January of 2022, hinting at possible weakness in the sector despite solid payroll gains.
Next week has several highly important economic reports scheduled for release in addition to a couple of Treasury auctions that are usually more influential than other sales. The list of economic reports includes two inflation readings (CPI and PPI) and key consumer spending data. The releases that are expected to heavily impact mortgage rates are set for Tuesday and Thursday. The week starts light with nothing scheduled for Monday that we need to be concerned about. Look for details on all of next week's activities in Sunday evening's weekly preview.
If I were considering financing/refinancing a home, I would....
Lock if my closing were taking place within 7 days... Lock if my closing were taking place between 8 and 20 days... Float if my closing were taking place between 21 and 60 days... Float if my closing were taking place over 60 days from now...
This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.*
*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
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