May 20th, 2016 12:25 PM by Jonathan White
Mortgage Market News for the week ending May 20, 2016
President and CEO
Mortgage Broker | NMLS ID: 3443
Blue Door Mortgage, LLC
1280 Centre Street
Newton, MA 02459
Outlook for Fed Policy
expected economic data and a shift in expectations for Fed policy were
negative for mortgage rates over the past week. As a result, mortgage
rates ended the week higher.
by Fed officials during the first part of the week alerted investors that
the Fed may be much closer to another
federal funds rate hike than investors expected. On Wednesday, the
release of the minutes from the April 27 Fed meeting confirmed this. In
the minutes, Fed officials made it clear that they will consider raising
rates as soon as June if economic conditions continue to improve.
Investors currently view tighter Fed policy as negative for
mortgage rates, so rates rose as the Fed's position became better
supporting the case for tighter monetary policy is stronger than expected
improvement in the recent housing data. Existing home sales in April rose
for the second straight month and were 6% higher than a year ago.
Inventories of existing homes available for sale jumped 9% from March.
Sales of existing homes make up about 90% of the market. Housing starts,
an indicator of future sales activity for newly built homes, increased 7%
in April from March.
the decision for the Fed a little is the recent inflation data. The
core consumer price index (CPI) in April was 2.1% higher than a year
ago, down from a multi-year high of 2.3% in February. After rising
significantly for several months, core inflation has declined for the
last two months. If this trend continues, it would make the Fed less
likely to raise rates.
the new home sales data will be released on Tuesday. Durable orders and
the pending home sales data will come out on Thursday. The second
estimate of first quarter GDP, the broadest measure of economic growth,
will be released on Friday. There will be Treasury auctions on Tuesday,
Wednesday, and Thursday. Several Fed officials are scheduled to make
speeches next week as well. Mortgage markets will close early on Friday
in observance of Memorial Day.
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