What’s Ahead For Mortgage Rates This Week – January 8th, 2024

With the first FOMC minutes of the year, it sets the tone of the potential moves the Federal Reserve will make, with them remaining firm in their current stance of not employing any rate cuts, however given the more recent end of year reports, there is a likelihood that rate cuts will start this year. The last change in rates was in July of last year. The second most important report also being the final PMI (Manufacturing) numbers, which has largely met expectations without any irregularities.

S&P Global US Manufacturing PMI

Manufacturing PMI was revised lower to 47.9 in December 2023 from a preliminary of 48.2, and compared to 49.4 in November, pointing to a bigger deterioration in manufacturing conditions.

FOMC Minutes

According to the minutes, several officials said that the Fed might have to hold its benchmark rate steady “for longer than they currently anticipated,” while a number of officials pushed for some easing.

The dovish officials “highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained, and pointed to the downside risks to the economy that would be associated with an overly restrictive stance,” according to the minutes.

Non-farm Payrolls

The unemployment rate was unchanged at 3.7% in December, the government said Friday, keeping it near a half century low.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week decrease by -0.04% with the current rate at 5.89%
• 30-Yr FRM rates seeing a week-to-week increase by 0.01% with the current rate at 6.62%

MND Rate Index

• 30-Yr FHA rates saw a 0.08% increase for this week. Current rates at 6.16%
• 30-Yr VA rates saw a 0.08% increase for this week. Current rates at 6.16%

Jobless Claims

Initial Claims were reported to be 202,000 compared to the expected claims of 220,000. The prior week was 216,000.

What’s Ahead

After the FOMC minutes for this week, next week will primarily be a light release week with one major report being the Consumer Price Index and Producer Price Index which will show the inflation rates over December.

What’s Ahead For Mortgage Rates This Week – January 2nd, 2024

With the New Year, the final week only featured the normal reports of Jobless Claims, S&P Shiller Home Price Index (YoY), and the Chicago Business Barometer. All of them will have limited impact compared to the GDP and the Inflation data reports that have already been released.

S&P Shiller Home Price Index (YoY)

For the ninth consecutive month, home prices in prominent U.S. metropolitan regions have surged, reaching an all-time high. This increase is attributed to an ongoing shortage of available homes for sale. In October, the S&P CoreLogic Case-Shiller 20-city house-price index, after seasonal adjustments, showed a 0.6% rise compared to the preceding month.

Chicago Business Barometer

The Chicago Business Barometer, also known as the Chicago PMI, fell 8.9 index points to 46.9 in December.

Economists polled by the Wall Street Journal had forecast a 50 reading. 

The index had jumped to 55.8 in November, the highest level in 17 months, after the end of the United Auto Workers strike.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week decrease by -0.02% with the current rate at 5.93%
• 30-Yr FRM rates seeing a week-to-week decrease by -0.06% with the current rate at 6.61%

MND Rate Index

• 30-Yr FHA rates saw a -0.04% decrease for this week. Current rates at 6.08%
• 30-Yr VA rates saw a -0.04% decrease for this week. Current rates at 6.09%

Jobless Claims

Initial Claims were reported to be 218,000 compared to the expected claims of 215,000. The prior week was 206,000.

What’s Ahead

Next week will be a light release week with one major report being the Consumer Price Index and Producer Price Index, which will show the inflation rates over December.

Mortgage Rate Locks: When and How to Secure the Best Rate

Rate locks play a crucial role in the mortgage application process, helping borrowers secure a favorable interest rate for their home loan. Here’s an explanation of the importance of rate locks and when and how to secure the best rate:

Interest Rate Protection: Mortgage rates are subject to market fluctuations and can change daily or even multiple times a day. Rate locks protect borrowers from potential rate increases during the loan processing period.

Budgeting and Planning: Knowing the exact interest rate allows borrowers to budget more effectively and plan their finances with certainty. It prevents unexpected increases in monthly payments, helping borrowers manage their expenses.

Peace of Mind: Homebuyers can experience peace of mind when they know their interest rate is secured. This allows them to focus on other aspects of the home-buying process without worrying about market volatility affecting their mortgage terms.

Financial Stability: Rate locks provide financial stability, especially for those on a tight budget. Unpredictable rate changes can significantly impact the affordability of a mortgage, and a rate lock mitigates this risk.

When to Secure a Rate Lock:

Timing Matters: Rate locks are typically available for a specific period, such as 30, 45, or 60 days. It’s crucial to lock in a rate at the right time, considering the expected duration of the loan approval process.

Market Conditions: Monitor market conditions to identify favorable times for rate locks. If interest rates are low or expected to rise, it might be advantageous to secure a rate lock sooner rather than later.

Loan Approval Status: It’s generally recommended to wait until your mortgage application is complete and the loan is in the underwriting process before locking the rate. This ensures that the lock period aligns with the expected timeline for loan approval.

How to Secure the Best Rate Lock:

Shop Around: Obtain quotes from multiple lenders to compare interest rates and terms. This provides a basis for negotiating and helps you identify the best possible rate.

Understand Lock Terms:

Be aware of the lock period and any associated fees or conditions. Longer lock periods may come with higher fees, so it’s essential to strike a balance that suits your needs.

Consider Float-Down Options: Some lenders offer float-down options, allowing borrowers to secure a lower rate if market conditions improve before closing. Understand the terms and conditions of this option.

Consult with a Mortgage Professional: Work closely with your mortgage broker or loan officer. They can provide guidance on the optimal time to lock in your rate based on market trends and your specific financial situation.

In the end, rate locks provide stability and predictability in a volatile market, enabling homebuyers to secure favorable mortgage terms. Timing, market awareness, and careful consideration of lock terms are essential to ensure you get the best rate for your mortgage.