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Mortgage rates ended the week a little higher

October 23rd, 2015 2:31 PM by Jonathan White

 

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Jonathan White

President and CEO
Mortgage Broker | NMLS ID: 3443

Blue Door Mortgage, LLC

NMLS: 2218

Call: 617.527.BLUE (2583)

jwhiteloan@bluedoormortgage.com
www.bluedoormortgage.com

1280 Centre Street

Newton, MA 02459

     

 

Foreign Central Banks

 

Foreign central banks were the main influence on U.S. mortgage rates over the past week. The news from Europe was a net positive, while China's policy change was negative. They mostly offset each other, and mortgage rates ended the week just a little higher.

 

On Thursday, European Central Bank (ECB) President Mario Draghi suggested that the ECB may expand its bond purchase program at its next meeting in December. While this is intended to stimulate the economy which could lead to higher inflation, the primary impact on bonds is from increased demand. The purchase of European bonds makes other global bonds, including U.S. mortgage-backed securities (MBS), relatively more attractive, increasing their demand as well. Since mortgage rates are set based on MBS prices, rates improved after the news. The added stimulus in China to boost economic growth announced on Friday did not involve any bond purchases. As a result, the main effect for mortgage rates was to raise expectations for future inflation, which was negative. 

 

It was a solid week for the housing market data. September existing home sales increased 5% from August, near the best levels in eight years, and they were 9% higher than a year ago. Total inventory of existing homes available for sale fell to a 4.8-month supply, and it was 3% lower than a year ago. The median existing-home price was 6% higher than a year ago. 

 

September single-family housing starts have held steady over the last three months near the best levels of the year. They were 12% higher than this time last year. Single-family building permits also were up a good deal from a year ago. 

 

 

Next week, the Fed Statement will be released on Wednesday. Investors do not expect a change in policy at this meeting, and they will be looking for guidance about the timing for the first rate hike. Beyond the Fed meeting, New Home Sales will be released on Monday. Durable Orders, an important indicator of economic activity, will come out on Tuesday. The first reading for third quarter GDP, the broadest measure of economic growth, will be released on Thursday, along with Pending Home Sales. Core PCE inflation will come out on Friday. 

 

 

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Posted in:Mortgage and tagged: mortgage
Posted by Jonathan White on October 23rd, 2015 2:31 PM

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