August 29th, 2014 2:04 PM by Jonathan White
Mortgage Market News for the week ending August 29, 2014
President and CEO
Mortgage Broker | NMLS ID: 3443
Blue Door Mortgage, LLC
Co. NMLS MB2218
20 Walnut Street
Wellesley, MA 02481
Weakness Drives Rates
The US economic
data released this week struggled to elicit a reaction in the market.
Instead, investors focused on increased expectations for asset
purchases by the European Central Bank (ECB). This news was favorable
for US mortgage rates, which ended near the lowest levels of the year.
The ECB has a
reputation for being tougher on inflation than the Fed, and monetary
policy has been tighter in the euro zone than in the US. Recent comments
suggest that the ECB is headed in the opposite direction, though. While
an improving US economy has caused the Fed to wind down its bond purchase
program, ECB officials have expressed growing support to implement
an asset purchase program to counter weak euro zone economic growth.
Investors have added European bonds to their portfolios ahead of this
expected added demand from the ECB, pushing their yields lower. This has
made global bond yields in other regions relatively more attractive,
including US mortgage-backed securities (MBS). The extra demand for MBS
has helped push down mortgage rates.
on the US housing market has been mixed. The Existing Home Sales report
released last week showed nice improvement, while this week's New Home
Sales data revealed a slight decline. The July Pending Home Sales
report, which is a leading indicator of future activity, rose to 105.9,
the highest level since September 2013. The National Association of
Realtors (NAR), which issues the report, defines a reading of 100 as an
"average level of contract activity".
there will be a summit on Saturday between EU officials and Ukrainian
officials. This may lead to additional sanctions against Russia. In the
US, the important monthly Employment report will be released on
Friday. As usual, this data on the number of jobs, the Unemployment Rate,
and wage inflation will be the most highly anticipated economic data of
the month. Before that, ISM Manufacturing will be released on Tuesday.
The ADP Employment Change will come out on Wednesday. Productivity and ISM
Services will be released on Thursday. Mortgage markets will be closed on
Monday in observance of Labor Day.
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