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Updated Interest Rates

VMG Weekly Rate Tracker – 12/23/2014

 NMLS# 35986    
VMG Weekly Rate Tracker- Your Local Mortgage Leaders (sharing is caring)
DATE:  Tuesday, December 23rd, 2014
TIME:  12:30 PM PST
SUGGESTION:  LOCK/BE IN POSITION TO LOCK –  Keep a close eye and get updates from your Loan Consultant (see below for more commentary)
****************MERRY CHRISTMAS!*****************
VMG CLIENT’S FIXED RATE PRICING OPTIONS  (rates subject to change)
***Below rate optional pricing has NO additional lender-related fees (i.e. processing, underwriting, application, etc.).  Lender credits below result in (negative) lender fees applied toward 3rd party fees or prepaids (taxes, insurance, interest).  Contact Loan Consultant for personalized quote.
*Rates change daily.  Conforming interest rate samples based off $240,000 loan amount, 75% Loan to Value, 740 or higher FICO score, with impounds on a 30 day rate lock period.  FHA/VA based off 3.5% down payment, but other same variables.  Costs or credits shown pertain to interest rate and do not include any other applicable 3rd party title and escrow charges or prepaid tax and insurance reserves which may or may not apply.  Lock period suggested depends on current loan volume and lending climate at time of loan application and approval.  Other risk-based pricing adjustment may apply.  The displayed annual percentage rates (APRs) include total points and additional prepaid finance charges but do not include other closing costs.   On adjustable-rate loans, rates are subject to increase over the life of the loan.   Learn more about assumptions and APR Information. Loan pricing may only be locked through a home loan consultant to be effective.  Rates will depend in part on your unique credit history and transaction characteristics. Please email or call for updated pricing at anytime as rates and pricing are subject to change. This information does not constitute a loan commitment or approval.

Rate Lock Advisory – Tuesday Dec. 23rd 

Tuesday’s bond market has opened in negative territory following a slew of economic news and early stock strength. The Dow is currently up 69 points and above 18,000 for the first time. The Nasdaq is showing a 6 point loss. The bond market is currently down 12/32 (2.19%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point. 

The first of today’s five reports came from the Commerce Department, who said that November’s Durable Goods Orders fell 0.7%, falling short of expectations of a 2.9% rise. A secondary reading that tracks new orders excluding transportation-related products such as airplanes also showed a weaker than expected reading (-0.4% vs +1.0%). Both readings indicate that demand for big-ticket products was not as strong as many had thought, making the data favorable for the bond market and mortgage rates.

However, this morning’s other early release gave us results that were anything but good news for bonds. The second revision to the 3rd Quarter Gross Domestic Product (GDP) showed that the U.S. economy grew at a surprising annual rate of 5.0%. This was much stronger than previously estimated and the largest quarterly rise since the third quarter of 2003, meaning that the economy was much stronger this summer than many had thought. The only thing preventing this news from causing a significant bond sell-off is the fact that this data is aged now and the markets are more interested in the current quarter’s reading that will be posted next month.

The third report of the morning was the revised University of Michigan Index of Consumer Sentiment for December just before 10:00 AM ET. It came in at 93.6, just shy of the preliminary estimate and forecasts of 93.8. This means that consumers were slightly less confident about their own financial and employment situations than previously estimated. However, it was not enough of variance to label the results good or bad for mortgage rates. 

November’s Personal Income and Outlays data was released at 10:00 AM ET, later than its usual 8:30 AM time. It revealed a 0.4% increase in personal income and a 0.6% rise in spending. Income was a bit softer than expected but the rise in spending was a little stronger than forecasts. The income reading helps us measure consumer ability to spend while the spending reading tracks actual spending. Because the two readings more or less offset each other, we can consider this report neutral towards today’s mortgage pricing.

The fifth and final piece of relevant economic data of the morning was November’s New Home Sales data. The Commerce Department announced that sales of newly constructed homes fell 1.6% last month when analysts were expecting to see little change. That news supports yesterday’s Existing Home Sales report that indicated a softening housing sector. We can consider this news favorable for bonds and mortgage rates, but since it is the week’s least important piece of data it has had little influence on this morning’s rates.

Besides all this economic data, we also have a Treasury auction to watch this afternoon. 5-year Treasury Notes will be sold today and 7-year Notes go tomorrow. Today’s auction results will be posted at 1:00 PM ET while tomorrows’ will be announced at 11:30 AM ET. If the sales were met with a strong demand from investors, bond prices may rise enough to lead to a slight improvement in mortgage rates during early afternoon trading today and late morning tomorrow. However, a lackluster investor interest may create bond selling and upward revisions to mortgage rates. 

Tomorrow has only a single report being released but it is not considered to be as important some of today’s data. At 8:30 AM tomorrow, we will get last week’s unemployment update. It is expected to show that 290,000 new claims for unemployment benefits were filed last week. That would be a slight increase from the previous week’s 289,000 initial claims. The higher the number of new claims, the better the news it is for the bond market and mortgage rates because rising claims indicates a softening employment sector. It is worth noting though that since this is only a weekly report, it usually takes a wide variance from forecasts for it to cause a noticeable move in mortgage pricing.

Tomorrow also has an early close for both the stock and bond markets ahead of Thursday’s Christmas Day holiday. Stocks are expected to close at 1:00 PM ET while bonds will trade until 2:00 PM ET. Even though the markets will be open for trading, I am expecting a pretty quiet and light volume session as many traders will head home long before the early closing times. That should keep mortgage rates relatively calm unless something significant and totally unexpected happens. The markets will reopen Friday morning for a full session, but with many traders still home for the holiday weekend, we should see another calm day.

Harris Consulting, Inc. DBA Vantage Mortgage Group, Inc.