Rate Lock Advisory

Wednesday, December 11th

As expected, this week’s FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. The Fed also indicated that it is likely no change to rates will be made next year followed by a single rate increase in both 2021 and 2022. Their updated economic projections showed only one notable change. That was the unemployment rate that is now expected to stand at 3.5% at the end of 2020 compared to the previously estimate 3.7%. The other key benchmarks such as GDP and inflation were left unchanged for the most part.



30 yr - 1.78%







Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock



Federal Open Market Committee (FOMC) Statement

This afternoon’s events were about as uneventful as we can expect from these meetings. Stocks have showed little reaction while bonds have extended this morning’s moderate gains. The Dow is currently up 14 points while the Nasdaq is now up 37 points, both nearly unchanged from this morning’s levels. The bond market is currently up 16/32 (1.78%), which should be enough of a move for some lenders to improve rates by approximately .125 of a discount point before the end of the day.



Treasury Auctions (5,7,10,30 year securities)

Yesterday’s 10-year Treasury Note auction went fairly well with several benchmarks showing a decent level of investor interest in the securities. However, it was not strong enough to cause much of a reaction in bonds after results were posted at 1:00 PM ET. In other words, it ended up being a non-factor for mortgage rates. But yesterday’s sale does allow us to be optimistic about tomorrow’s 30-year Bond auction. Results will be posted at 1:00 PM ET, making it an afternoon event.



Consumer Price Index (CPI)

November's Consumer Price Index (CPI) was posted at 8:30 AM ET, giving us a very important measurement of inflationary pressures at the consumer level of the economy. It showed that the overall reading rose 0.3% while the more important core data rose 0.2%. Both readings were expected to rise 0.2%, meaning the overall was a bit stronger than expected. However, the core data draws the most attention because it excludes more volatile food and energy costs. Since it didn’t show any surprises, we can consider the report neutral for bonds and mortgage rates.



Producer Price Index (PPI)

Tomorrow’s sole monthly economic report will be November's Producer Price Index (PPI) at 8:30 AM ET. This is the sister release to today’s CPI, tracking inflationary pressures at the producer or manufacturing level of the economy instead of the consumer level. There are also two portions of the index that are used- the overall reading and the core data reading. If it reveals stronger than expected readings, indicating that inflationary pressures are rising faster than thought, the bond market will probably react negatively. That would drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond by pushing mortgage rates slightly lower. Forecasts are calling for a 0.2% increase in both readings.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.