MIG Market Watch, August 21st, 2023
Market Comment

Mortgage bond prices finished the week lower which put upward pressure on rates. The up and down trading pattern continued as inflation fears remained heightened. The Fed minutes indicated inflation risks could require additional tightening. We started the week negatively, saw a slight rebound Tuesday morning, experienced heavy selling Wednesday and Thursday, and closed the week with a slight bounce back Friday morning. The data was mixed. Housing starts were 1.452M vs 1.448M. Industrial production rose 1% vs 0.3%. Capacity use was 79.3% vs 79.1%. Weekly jobless claims were 239K vs 240K. The Philadelphia Fed business conditions index was 3.9 vs 31.6. LEI fell 0.4% as expected. Mortgage interest rates finished the week worse by approximately 3/8 of a discount point.

Looking Ahead
Economic Indicator Release Date & Time Consensus Estimate Analysis
Existing Home Sales Tuesday, Aug. 22,
10:00 am, et
4.15M Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
New Home Sales Wednesday, Aug. 23,
10:00 am, et
700K Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, Aug. 24,
8:30 am, et
240K Important. An indication of employment. Higher claims may result in lower rates.
Durable Goods Orders Thursday, Aug. 24,
8:30 am, et
Down 3.8% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Aug. 25,
10:00 am, et
71 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Mortgage Professionals

Obtaining a mortgage is often a confusing task that can also lead to frustration. The reason for the confusion is due to the fact that mortgage financing is complex. The good news is that this complexity provides consumers with options and choices best suited to fit their needs.

Everyone’s financial position is unique. Some people have large cash reserves that can be used for down payments while others want to get into a home with little or no money down. Credit ratings vary from person to person. In addition, future plans vary. Some people plan on staying in their home for the rest of their lives while others only plan on staying for a few years. These facts alone make comparing your mortgage to your neighbor’s based on rate alone a flawed endeavor, yet many people attempt to do so.

Admittedly, everyone wants a good deal. Keep in mind that comparing rates is just one component of the entire mortgage. Other variables include the term, down payment requirements, income qualifications, credit ratings, reserve requirements, current debt, prepaid points, and many more. A mortgage professional can take all of these variables that are unique to each individual and help a person obtain the loan that best fits their situation. The service they provide is time consuming and complex. However, the rewards of dealing with a professional carry forward throughout a borrower’s life. Making wise financial decisions today helps to pave the way for a safe and secure future.

Mortgage interest rates currently remain very volatile. There is much uncertainty about the future of the economy and inflation. A cautious approach to lock decisions is wise.