🎉 Happy New Year! 🥳
Rates
Rates are a smidge higher than last week’s average. Nothing to be too worried over, yet.
Important notes for understanding and using this information:
- Any site/chart that advertises rates (like the above) is showing a national average for one very specific loan scenario, as reported by survey respondents. These aren’t the rates that borrowers are locking in. Use this only as a tool to get a gauge of what ballpark to expect
- 30 Yr Fixed Conventional: a “top tier” scenario is used as a baseline (owner occupied, single family, 25% down, 780+ credit)
- Most important point:Â the best use of this index is to track the CHANGE from week to week. There are so many things that can cause discrepancies between borrowers, lenders, and quotes.
Commentary
Mortgage rates managed to make it through the entire holiday season without any major drama. That was in sharp contrast to the preceding month which saw a decent drop heading into early December and a sharp spike that accelerated after the Fed’s rate cut on the 18th.
This sort of indecision isn’t necessarily a given for the end of December, but it’s certainly the baseline. Absences among market participants and disruptions in the economic calendar make it easier for everyone to plan on simply jumping back in with both feet on the first full week of January.
In simple terms, this means that the odds of volatility (for better or worse) are higher this week. Over the past 6 months, biggest movement surrounded the release of the monthly jobs report at the beginning of each of the past 4 months. The next installment is out next Friday, January 10th.
Even before then, the combination of increased trader participation and several other highly regarded economic reports could get things moving in one direction or the other earlier in the week. On the other side of the jobs report, the following week brings equally important inflation data in the form of the Consumer Price Index (CPI).
When it comes to “movement,” whether in rates or housing metrics, we remain in a sort of limbo. Importantly, it will take more than the first two weeks of January for any truly significant momentum to develop.
Lock/Float Considerations
No change from last week. Watch this week’s activity closely.
Last week: Rates continue muddling along at or near longer-term highs following the December 18th Fed announcement. If we hope to see significant improvement, it would depend on big ticket econ data like the jobs report or CPI (Jan 10th and 15th respectively). Random volatility remains a risk in the New Year holiday week. If we see calendar-driven support, it wouldn’t be until Thursday and even then (and to reiterate), bigger victories require bigger data.
Econ Calendar – Potential Market Movers
- Tuesday – ISM (Institute for Supply Management) Services PMI (Purchasing Managers’ Index), December
- Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry
- Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry
- Wednesday – Unemployment Claims, weekly
- Wednesday – FOMC Meeting Minutes
- Thursday – Jimmy Carter Day of Mourning
- NYSE, Nasdaq closed
- Bond market closes 2PM EST
- Friday – Unemployment Rate, monthly
- Friday – Non Farm Payroll, monthly
- Change in the number of employed people during the previous month, excluding the farming industry
- Friday – Average Hourly Earnings, monthly
- Change in the price businesses pay for labor, excluding the farming industry; It’s a leading indicator of consumer inflation – when businesses pay more for labor the higher costs are usually passed on to the consumer
Loan Program Updates
Luminate offers multiple bridge loan options!
- Buy side bridge – buyer takes a short-term personal loan allowing them to make a cash offer
- Sell side bridge – use equity in departing residence for down payment on new purchase (available as a 1st or 2nd mortgage on the departing residence)
- Guaranteed Backup Contract – bonafide contract to purchase departing residence 120 days after new home purchase. Allows borrower to exclude departing residence from new home qualifications. Goal is to sell departing residence on the open market in fewer than 120 days; if cannot, home is sold per the Guaranteed Backup Contract terms