Wednesday Afternoon Update

Today’s FOMC meeting adjourned with an announcement of another quarter point increase to key short-term interest rates. This was the sixteenth consecutive increase but was expected and has not affected mortgage rates or bond trading much. However, the post-meeting statement did lead to inflationary fears and initially, sellin g in the financial markets.

The statement indicated that more rate hikes may be needed, depending on future economic data. This was not what analysts were expecting to hear. They wanted a stronger hint that the end is near for the increases and inflation was in-check. The knee-jerk reaction led to selling in the markets and upward revisions to mortgage rates.

The Dow has rebounded from the initial selling, currently standing up 20 points, while the Nasdaq remains down 12 points. The bond market has given back its earlier gains, currently standing +1/32. This will likely lead to many lenders revising rates higher this afternoon by approximately .125 of a discount point.

Tomorrow morning will brings us the first piece of important economic news. April’s Retail Sales data will be posted at 8:30 AM. This is an extremely important report for the financial markets as it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. ec onomy, this data can have a pretty significant impact on the markets. Current forecasts are calling for an increase in sales of approximately 0.8%. A smaller than expected increase should push bond prices higher and mortgage rates lower. However, a larger increase could fuel bond selling and lead to higher mortgage rates early tomorrow.

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.

Provided by a la mode