Rate Lock Advisory

Wednesday, December 10th

WEDNESDAY AFTERNOON UPDATE:
The eighth FOMC meeting of the year has adjourned with an announcement of a quarter-point reduction in key short-term interest rates. This was the third consecutive cut and was widely expected because of stability concerns about the employment sector.

7/32

Bonds

30 yr - 4.16%

542

Dow

48.,103

94

NASDAQ

23,671

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Unknown

Federal Open Market Committee (FOMC) Statement

Today’s decision was not unanimous. For the first time since 2019 three members voted against the decision. Two members wanted to leave rates unchanged out of concern that inflation may still be an issue and the third preferred a half-point cut. While not an issue today, the growing minority could cloud what they do in the future. The so-called dot plot released today indicates the Fed members are currently predicting one rate cut next year.

Medium

Positive

Misc Fed

We also got revised economic projections from the Fed today. They now feel the economy will grow at an annual rate of 1.7% this year (GDP), up slightly from the previous estimate of 1.6% and 2.3% next year. Their prediction for the unemployment rate is to close this year at 4.5% (currently 4.4%) and 4.4% for 2026. Inflation is now likely to be at 3.0% at the end of 2025 and falling to 2.5% next year according to their forecasts. None of these changes are significant enough to cause much concern or joy in the bond market. Slower GDP growth and softer inflation are theoretically favorable for bonds and mortgage rates, but a lower unemployment rate would be bad news.

Medium

Positive

General Bond Trends

Overall, we have seen a slightly favorable reaction to this afternoon’s events. The bond market is currently up 7/32 (4.16%), which is enough of a move from this morning’s level for some lenders to issue a minor intraday improvement to rates. Others may wait to see what overnight trading and tomorrow’s opening brings before making that adjustment. Stocks are rallying with the Dow up 542 points and the Nasdaq up 94 points. Both are much better than where they were this morning.

Low

Positive

Employment Cost Index (Quarterly)

The 3rd Quarter Employment Cost Index (ECI) was released earlier today, revealing a 0.8% increase. This means employer costs for wages and benefits rose during the July through September months. It was a tad softer than the 0.9% that was expected, allowing us to label the report slightly favorable for bonds and mortgage rates.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow’s sole relevant economic data will be last week’s unemployment figures at 8:30 AM ET. They are expected to show 217,000 new claims for jobless benefits were made, up from the previous week’s surprise 191,000 that was the lowest since 2022. Rising claims are a sign of weakness in the employment sector, so a larger than predicted number would be good news for mortgage rates.

Medium

Unknown

Treasury Auctions (5,7,10,20,30 year)

Also tomorrow is the 30-year Treasury Bond auction. As with yesterday’s 10-year Note sale, this will give us an idea of investor appetite for long-term debt. Since mortgage rates are based on long-term securities, a particularly strong or weak sale can affect afternoon bond trading and mortgage pricing. Results will be posted at 1:00 PM ET. A strong demand from investors could lead to bond gains and a downward revision to mortgage rates tomorrow afternoon.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock 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.

Thomas-Chambers Company
BRE # 01208644

449 W MacArthur Blvd.
Oakland, CA 94609
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