Rate Lock Advisory

Wednesday, June 19th

This week’s FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. The post-meeting statement had several noteworthy changes to it. The most relevant one was removing the word “patient” regarding its stance on making a change to key rates. They now imply they will be “closely monitoring” situations. The only negative note was a reference to an increase in consumer spending. That was offset by a change in description of business spending, reflecting weaker levels. They also referred to the economy growing at a moderate pace compared to the solid pace they used previously, pointing towards slower economic growth.



30 yr - 2.03%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Misc Fed

The economic projections didn’t show too many surprises. Their prediction for GDP growth this year was unchanged at 2.1% while 2020’s prediction was revised slightly higher. They also see a slightly lower unemployment rate than previously excepted (from 3.7% to 3.6%). Really good news came in the inflation predictions that were revised lower and will likely stay below the Fed’s preferred rate of 2.0% until at least 2020.



Misc Fed

Overall, there is little in this afternoon’s news that we need to be concerned about. The Fed has made it apparent that a rate cut is a very real possibility before the end of the year. Eight of the seventeen members are expecting a rate cut to be needed before the end of the year. All but one of the remaining nine feel short-term rates will stay where they are now. This news puts credibility into the theory that the economy is slowing enough for the Fed to intervene. Since bonds tend to thrive during weaker economic conditions, we have seen enough of a move this afternoon to cause many lenders to improve pricing intraday. The bond market is currently up 7/32 (2.03%) after being in negative ground this morning. Stocks have not made as big of a move but have improved from earlier levels. The Dow is currently up 66 points while the Nasdaq has gained 20 points.



Leading Economic Indicators (LEI) from the Conference Board

Besides weekly unemployment figures, we will also get May's Leading Economic Indicators (LEI) tomorrow morning. The Conference Board, who is a New York-based business research group, produces this report. It attempts to predict economic activity over the next three to six months. Good news for mortgage rates would be a decline in this index, but it is expected to show a 0.1% increase from April's reading. This means it is predicting a modest increase in economic growth over the next several months. Since this report is not considered to be of high importance, I don't see it causing too much movement in rates regardless if it shows a particularly strong or weak reading.

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.