April 11th, 2025 5:43 PM by T. Fanning
Hello! I hope you have a great weekend and enjoy the beautiful weather!
This week was extremely volatile for financial markets, including U.S. bonds. Bonds experienced the largest week-over-week rise in 10-year yields since 1981, a development that pushed mortgage interest rates higher.
Next week is calm at first with only a couple of Fed speeches on Monday and Tuesday. Wednesday kicks off with the important Retail Sales report, a Treasury auction, and a speech by Fed Chair Powell. Corporate earnings season also begins; while earnings mostly affect stocks, they can sometimes influence bond trading and mortgage rates.
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans (100% FHA financing); Conventional 0% down; 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
As always, please let me know if I can help you, your friends/family/potential buyers/borrowers!
Last Updated: 4/11/25
Friday's bond market has opened sharply weaker despite clearly bond-friendly economic news. Stocks are showing early gains of 95 points in the Dow and 105 points in the Nasdaq, but who knows if they will hold or not. The bond market is currently down 22/32 (4.51%) after a sizable sell-off late yesterday. Due to those losses, this morning's mortgage rates should be considerably higher than Thursday's early pricing. The change in rates between midday yesterday and this morning should be somewhere in the neighborhood of .875 – 1.125 of a discount point.
Yesterday's 30-year Treasury Bond auction followed suit of Wednesday's 10-year Note sale by drawing a strong demand from investors. We saw a good reaction to the 1:00 PM ET results announcement with bonds improving immediately after. However, bond prices were already well off of their morning highs before results were posted and shortly after, they resumed the negative momentum that led to many lenders making an upward revision to mortgage pricing. In other words, the auction itself was good news for rates by theory, but didn't carry enough importance to offset the unfavorable environment in the market.
This morning's release of March's Producer Price Index (PPI) revealed wholesale inflation was also much softer than expected, just as we saw with yesterday's consumer inflation data. It showed a 0.4% drop in March's overall PPI and a 0.1% decline in the more important core reading that excludes volatile food and energy costs. Analysts were expecting to see increases of 0.2% and 0.3% respectively. As with the CPI, even better news came in the year-over-year numbers. The overall reading fell from February's 3.4% to 2.7% last month and core data went from a 3.6% annual pace down to 3.3%. These numbers verify inflationary pressures were falling before the tariff issue arose. It appears that traders are much more concerned about what the future will bring after the impact of the tariff war starts to appear in the inflation data than they are of looking backward.
More favorable economic data came in the University of Michigan's Index of Consumer Sentiment for April at 10:00 AM ET. They announced a reading of 50.8 that was down considerably from March's 57.0 and much lower than forecasts. This was the lowest reading of consumer confidence in their own financial situations since June 2022 and the second lowest on record, which goes all the way back to 1952. Waning confidence is relevant because as consumers grow more worried about their own financial situations, they are likely to cut back on spending and delay large purchases. Since consumer spending makes up over two-thirds of the U.S. economy, this is a sign the economy may be weakening in the near future. Unfortunately, even though this report is very good news for bonds by theory, it is being ignored as traders are focused on other factors.
Next week starts off fairly light with just a couple of Fed-member speeches scheduled Monday and Tuesday. Economic reports begin Wednesday morning with the release of the highly important Retail Sales report that tracks consumer spending. There is also another Treasury auction and speaking engagement by Fed Chairman Powell midweek that will draw plenty of attention. We are also heading into corporate earnings season that is much more relevant to stocks than bonds, but as we saw recently, stocks do sometimes influence bond trading and mortgage rates. It will be a holiday-shortened week due to the Good Friday holiday. 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... Lock 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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