October 23rd, 2015 2:31 PM by Jonathan White
Mortgage Market News for the week ending October 23,
President and CEO
Mortgage Broker | NMLS ID: 3443
Blue Door Mortgage, LLC
1280 Centre Street
Newton, MA 02459
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.
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.
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
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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