Your Daily Mortgage Commentary & Rate Lock Advice for Massachusetts Mortgage Rates
Courtesy of the Massachusetts Mortgage Broker
This week’s FOMC meeting will begin on Tuesday but will not adjourn until Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement. There appears to be more and more discussion about when the Fed will have to start raising key interest rates to prevent inflation from strengthening. If the statement gives any hint of when that may be, or there is a change in the regular canned portions of the statement, we could see a sizable change to Massachusetts mortgage rates Wednesday afternoon.
In addition to this week’s economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect Massachusetts mortgage rates. There will be an auction of 5-year Notes Wednesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower Massachusetts mortgage rates. Results of the sales will be posted at 1:00 PM ET auction day, so look for any reaction to come during afternoon hours.
There is nothing of importance scheduled for Thursday morning but there are three reports scheduled for release late Friday morning. The first is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets Friday and therefore Massachusetts mortgage rates also. Analysts are expecting to see an increase in output at an annual rate of 3.2%. A much smaller increase would be good news for mortgage rates. But, a stronger than expected reading would almost certainly cause stock prices to rise and bond prices to fall, leading to higher Massachusetts mortgage rates Friday morning.
The second report of the day is the 1st Quarter Employment Cost Index (ECI), which tracks employer costs for wages and benefits. This gives us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns cause the bond market to fall and Massachusetts mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.5%.
The last is the University of Michigan’s update to their Index of Consumer Sentiment for April. This report gives us an indication of consumer sentiment. I don’t expect it to have a significant impact on bonds and Massachusetts mortgage rates unless it varies greatly from forecasts. Current forecasts are calling for an upward revision to push the index to 71.5. This means that surveyed consumers were more optimistic about their own financial situations than they were earlier this month.
Overall, look for plenty of movement in the financial markets and mortgage some days this week, while others will probably be calm. Wednesday will likely be the most important day of the week with the FOMC adjournment, but we may see noticeable changes to Massachusetts mortgage rates Friday after the GDP is posted. If this week’s reports reveal weaker than expected economic conditions, the bond market should extend its rally and mortgage rates should fall for the week. However, I recommend taking a cautious approach towards rates if still floating an interest rate and closing in the near future.
If I were considering purchasing or refinancing a home and predicting likely Massachusetts mortgage rates, 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 a general opinion of what I would do if I were considering whether to lock or float a Massachusetts mortgage based on the current mortgage market. Your individual situation may be different. Contact me if you would like advice for your particular circumstances.
Copyright : Mortgage Commentary
Geof McLaughlin, better known as The Massachusetts Mortgage Broker, is a nationally acclaimed mortgage professional committed to educating and empowering consumers about all things mortgage through his popular Massachusetts Mortgage Broker blog.
Geof is a top loan originator for one of the country’s leading mortgage companies, Mortgage Master Inc, with a proven reputation of offering its clients the best Massachusetts mortgage rates and lowest closing costs. He can be reached directly at 508.656.0055 or at geof@MAMortgageBroker.com.
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