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Compliments of

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

     

 

GDP Jumps

 

The big news this week was Friday's GDP report, and it was favorable for mortgage rates. As a result, rates ended a little lower, ahead of several major economic releases next week. 

 

While the headline figure for first quarter GDP, the broadest measure of economic growth, was much stronger than expected, mortgage rates declined after its release. This was due to the details of the report. First quarter GDP increased 3.2%, which was far above the consensus forecast of 2.3%, and was up from 2.2% growth during the fourth quarter. This was the best reading for Q1 since 2015, and it took place despite an estimated 0.3% loss in growth resulting from the government shutdown. 

 

However, a closer look revealed a couple of factors which were much more positive for mortgage rates. First, the broad measure of inflation contained in the report was much lower than expected during the first quarter. In addition, the surprising strength was seen in inventories and exports, which are volatile from quarter to quarter and thus are viewed by investors as less informative. The "core" components such as consumer spending and business investment, which better reflect the underlying trend in the economy, showed slower growth than during the previous quarter, and the housing sector again was weak.

 

The other news from the housing sector released this week was mixed. In March, sales of previously owned (existing) homes were weaker than expected and 5% lower than a year ago. On the other hand, sales of new homes surprised to the upside and were at the highest level since November 2016. Since new home sales represent signed contracts, while existing home sales are based on actual closings, the new home sales report is a more forward-looking indicator of housing market activity. 

 

 

Looking ahead, it will be a packed week. The next Fed meeting will take place on Wednesday. No change in rates is expected, and investors will be looking for guidance about future monetary policy. The monthly Employment report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. In addition, the core PCE price index, the inflation indicator favored by the Fed, will be released on Monday. The ISM national manufacturing index will come out on Wednesday and the ISM national services index on Friday. 

 

Weekly Change

10yr Treasury

fell

0.06

Dow

fell

100

NASDAQ

rose

100

Calendar

Mon

4/29

Core PCE

Wed

5/1

Fed Meeting

Fri

5/3

Employment

 

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

 

 

Posted in:mortgages and tagged: mortgage brokers
Posted by Jonathan White on April 26th, 2019 11:52 AM

Compliments of

JonathanWhite

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,MA02459

U.S. and EU Take a Step Back

The main influence on mortgage rates this week was fresh news about tariffs, which was negative for mortgage rates. The major economic data came in mostly on target, and Thursday's European Central Bank meeting contained no policy changes and had just a minor impact. As a result, mortgage rates ended a little higher.

On Thursday, the Trump administration announced that the U.S. and the European Union (EU) had agreed not to escalate their trade dispute. Neither will impose further tariffs while the two sides attempt to work out their differences. If the U.S. and the EU can come to terms, it would allow them to work together to focus on improved trade agreements with other countries, most notably China. Investors reacted to the reduced chances of a trade war by shifting to riskier assets such as stocks from safer assets such as bonds, including mortgage-backed securities (MBS). The decrease in demand for MBS caused mortgage rates to rise a little.

Friday's release of second quarter gross domestic product (GDP), the broadest measure of economic growth, showed a massive increase of 4.1%, which was close to the expected levels. This was up from 2.2% during the first quarter and was the highest reading since the third quarter of 2014. Strength was seen in both consumer spending and business investment. Investors now will be watching to see if the underlying trend is closer to the first quarter or the second quarter levels.

Looking ahead, the important monthly Employment report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the Core PCE price index, the inflation indicator favored by the Fed, will be released on Tuesday. The ISM national manufacturing index will come out on Wednesday, and the ISM national services index will come out on Friday. The next Fed meeting will take place on Wednesday. No change in policy is expected.

Weekly Change

Mortgage rates

rose

0.03

Dow

rose

500

NASDAQ

fell

10

Calendar

Mon

7/30

Core PCE

Wed

8/1

Fed Meeting

Fri

8/3

Employment

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Posted in:mortgages and tagged: home mortgage
Posted by Jonathan White on July 27th, 2018 6:26 PM

Compliments of

JonathanWhite

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,MA02459

Fed and Data Benefit Rates

Over the past week, comments from Fed officials and weaker than expected economic data were positive for mortgage rates. After rising for the last two weeks, mortgage rates ended this week lower.

Every six months, the head of the U.S. Fed testifies before Congress. In her testimony on Wednesday, nearly all of Fed Chair Janet Yellen's comments simply reiterated what had already been communicated by Fed officials. However, she did provide one new piece of information regarding future Fed policy which caused a significant reaction. Yellen said that the Fed would not have to raise the federal funds rate "all that much further" to reach a "neutral policy stance," which is the rate which neither helps nor hinders economic growth. The practical implication of a lower "neutral" rate is that the Fed would stop raising rates sooner than investors had previously expected. A potentially smaller number of future rate hikes was viewed as good news for mortgage rates.

A shortfall in the retail sales and inflation data released on Friday also was positive for mortgage rates. Excluding the volatile auto component, retail sales in June declined for the second straight month, while the consensus was for a modest increase. This was the first period of back-to-back monthly declines since July and August of last year.

The inflation data also fell short of expectations. The core consumer price index (CPI), which excludes food and energy, remained well below the Fed's target level of 2.0%. Expectations for another rate hike by the Fed this year declined after the release of the retail sales and inflation data.

Looking ahead, the biggest event for U.S. markets next week likely will be the European Central Bank meeting on Thursday. While ECB officials have already said that they will wait for the meeting on September 7 to announce their plans for the bond purchase program, any guidance at this meeting about future policy will affect markets around the world. It will be a light week for U.S. economic data. The NAHB housing sentiment index will be released on Tuesday. Housing Starts will come out on Wednesday. The Philadelphia Fed regional manufacturing index will be released on Friday.

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Posted in:mortgages and tagged: fed rate and mortgages
Posted by Jonathan White on July 14th, 2017 12:15 PM

Compliments of

JonathanWhite

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,MA02459

Europe Influences U.S. Markets

Over the past week, mortgage rates were influenced mainly by events in Europe. The outcome of Sunday's French election was bad for mortgage rates, while Thursday's European Central Bank meeting was mildly positive. The U.S. economic data had little impact. Mortgage rates ended the week a little higher.

One pro-EU candidate (Macron) and one anti-EU candidate (Le Pen) won the first round of Sunday's French Presidential election and will compete in the second round on May 7. Polls indicate that Macron is heavily favored to win the second round, which reduces some concerns that France will leave the European Union. Investors reacted by reversing the flight to safety trade which took place ahead of the election. This means that they shifted back to riskier assets such as stocks and out of safer assets such as mortgage-backed securities (MBS). The increased supply of MBS caused mortgage rates to rise.

At Thursday's meeting, the European Central Bank (ECB) made no policy changes, as widely expected. The tone of ECB President Draghi was more dovish than anticipated, however. Some investors had worried that ECB officials might hint at a reduction in bond purchases by the ECB. The fact that they did not was good news for mortgage rates.

The first reading for first quarter U.S. gross domestic product (GDP) released on Friday was 0.7%, below the consensus of 1.1%, and down from 2.1% in the fourth quarter of 2016. This was the slowest quarterly growth in three years. Weak consumer spending and a decline in inventories were a couple of the primary factors in the shortfall.

These components are volatile on a quarterly basis, and many economists believe that the weakness in the first quarter simply pushed some economic activity into later quarters. As a result, the report had little impact on mortgage rates.

Looking ahead, it will be a packed week. The next Fed meeting will take place on Wednesday. No change in rates is expected, but investors will be eager for guidance on the pace of future tightening. The key monthly Employment report will be released on Friday. Before that, important data on inflation, manufacturing, and services will be released. In addition, news about policies from the Trump administration or about the French election on May 7 could influence mortgage rates.

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Posted in:mortgages and tagged: mortgages
Posted by Jonathan White on April 28th, 2017 1:47 PM

Compliments of

JonathanWhite

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,MA02459

Rising Rate Hike Expectations

A shift in expectations toward a faster pace of tightening by the Fed was negative for mortgage rates this week. Stronger than expected economic data also was unfavorable. As a result, mortgage rates ended the week higher.

This week, speeches by several Fed officials were more hawkish than expected. This caused investors to expect a faster pace of monetary policy tightening. Futures markets now price in about a 75% chance of a federal funds rate hike at the next Fed meeting on March 15, up from just a 25% chance a week ago. While the federal funds rate is more highly correlated with short-term yields than with long-term yields such as mortgage rates, a faster pace of tightening is bad for mortgage rates because it likely means that the Fed will begin to reduce its holdings of mortgage-backed securities (MBS) sooner. Fed purchases of MBS have helped mortgage rates move lower in recent years, so the shortened expected timeline for reduced demand from the Fed caused mortgage rates to rise.

One reason that Fed officials may be inclined to hike rates this month is that recently released economic data has generally continued to surpass expectations. Since the election, both consumers and businesses appear to be more optimistic about the economic outlook. The February measure of Consumer Confidence from the Conference Board rose to the highest level since 2001.

The ISM national manufacturing index increased to 57.7, the highest level since August 2014. Readings above 50 indicate an expansion in the sector. As recently as August, the index was below 50. The ISM national services index also rose more than expected to 57.6, the best reading since April 2015. Stronger economic activity raises future inflationary pressure, which is bad for mortgage rates.

Looking ahead, there will be a European Central Bank (ECB) meeting on Thursday. No policy changes are expected, but guidance about the outlook for future policy could influence U.S. markets. In the U.S., the important monthly Employment report will be released on Friday. As usual, this report on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Posted in:mortgages and tagged: fed rate and mortgages
Posted by Jonathan White on March 3rd, 2017 5:15 PM

Compliments of

JonathanWhite

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,MA02459

Focus on Europe

It was another volatile week for mortgage markets. Uncertainty about the outcome of the elections in Europe had a positive influence on U.S. mortgage rates. The Fed minutes and the economic data had little net effect. As a result, mortgage rates ended the week lower.

One source of volatility is uncertainty about the outcome of upcoming elections in several European countries. Investors are most focused on the presidential election in France which will take place on April 23. Polls show a close race between Marine Le Pen and Emmanuel Macron. Le Pen's campaign has been centered on plans for France to leave the EU and to stop using the euro currency, while the centrist Macron has run on a more traditional platform. It is not clear what would happen to the EU if France decided to exit. As a result, investors have reacted by shifting to safer assets after news which favors a Le Pen victory and doing the opposite after positive news for Macron. Since U.S. mortgage-backed securities (MBS) are viewed as relatively safer assets, they have been affected by the shifts in sentiment, causing volatility. The net effect on mortgage rates for the week was positive.

The Fed was another source of volatility this week. On Wednesday, the Fed released the minutes from the February 1 Fed meeting. Concerned that the Fed might talk about a need to reduce its holdings of MBS, investors pushed mortgage rates a little higher ahead of the release of the minutes. When the minutes made little mention of this topic, investors later reversed their positions, resulting in little net change.

Home sales begin the year on a strong note. In January sales of previously owned homes rose to the highest level since February 2007. Sales might have been even better if inventory levels had been higher. Total inventory of existing homes for sale remained near record low levels with just a 3.6-month supply.

Looking ahead, Pending Home Sales and Durable Orders will come out on Monday. The Core PCE price index, the inflation indicator favored by the Fed, will be released on Wednesday. The ISM national manufacturing index also will come out on Wednesday, and the ISM national services index will be released on Friday. Fed Chair Yellen is scheduled to speak on Friday as well. The next Employment report will come out on March 10 (due to February being a shorter month).

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Posted in:mortgages and tagged: fed rate and mortgages
Posted by Jonathan White on February 24th, 2017 11:53 AM

Compliments of

JonathanWhite

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,MA02459

Volatile Week

It was a volatile week for mortgage rates. A wide range of factors, including Italian politics, OPEC, and U.S. economic data, caused significant reactions. The net effect was small, however, and mortgage rates ended the week with little change.

On Sunday, Italians will vote on a referendum presented by Prime Minister Matteo Renzi. If successful, the referendum would simplify the process in Italy for passing laws. The most recent polls suggest that it may be a very close vote. If the referendum fails to pass, critical reforms for the Italian banking sector likely would be postponed. This would put some banks in Italy and in other European countries at risk of failing. In addition, Renzi has said that he will step down if the referendum fails. This would likely lead to a period of political uncertainty in Italy. Early in the week, investors began to noticeably react to the uncertainty by shifting to safer assets, including U.S. mortgage-backed securities (MBS), which was good for mortgage rates.

On Wednesday, however, OPEC representatives announced an agreement to cut oil production. This caused oil prices to surge over 9%. Since higher oil prices raise the outlook for future inflation, this was negative for mortgage rates. The increase in rates on Wednesday more than offset the improvement seen earlier in the week.

In contrast to the OPEC news, a shortfall on wage gains in Friday's key Employment report reduced inflationary pressures, which was positive for mortgage rates. In November, average hourly earnings were far below the consensus with a small decline from October. They were 2.5% higher than a year ago, down from the multi-year high of 2.8% last month.

Job growth was right on target. Against a consensus forecast of 170K, the economy added 178K jobs in November. The unemployment rate declined from 4.9% to 4.6%, well below the consensus for a flat reading, and the lowest level since August 2007. The unexpected decline in the unemployment rate was mostly due to workers leaving the labor force, however, which is not positive news for the economy.

Looking ahead, the Italian vote will take place on Sunday, and the results likely will affect U.S. mortgage rates on Monday. After that, the next big event will be the European Central Bank (ECB) meeting on Thursday. Investors are divided about what the ECB will decide. In the U.S., the most significant economic report will be ISM Services on Monday. The next U.S. Fed meeting will take place on December 14.

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Posted in:mortgages and tagged: mortgages
Posted by Jonathan White on December 2nd, 2016 12:39 PM

Compliments of

JonathanWhite

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,MA02459

Another Rough Week

It has been another rough week for mortgage rates. Volatility has been high. The market action was driven almost entirely by expected policy changes under the Trump administration. Mortgage rates rose during the week to the highest levels of the year.

Investors expect that the policy changes under a Trump administration will be good for stocks and negative for bonds. Expectations of greater fiscal stimulus are good for stocks, but they also raise the outlook for future inflation. This is bad for bonds because investors judge the value of bonds based on their future cash flow. An increase in inflation reduces the value of future cash flows, so investors demand a higher yield when the outlook for inflation rises. Since mortgage rates are set based on the value of mortgage-backed securities (MBS), higher yields for MBS lead to higher mortgage rates.

While it had little market impact, the report on housing starts was very encouraging. In October, total housing starts rose a massive 26% from September to an annual rate of 1.32 million, far above the consensus of just 1.17 million, and the fastest pace since August 2007.

Strong gains were seen in both single-family and multi-family units. Single-family starts, which make up about 60% of the market, increased 11% to the highest level since October 2007. Building permits for single-family homes also rose in October, which is a positive sign for future activity.

Looking ahead, new information about the plans of the Trump administration likely will continue to influence mortgage rates. In addition, Existing Home Sales will be released on Tuesday. New Home Sales and Durable Orders will come out on Wednesday. The minutes from the November 2 Fed meeting also will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials. The minutes are not likely to change investor expectations for a rate hike at the next Fed meeting on December 14. Mortgage markets will be closed on Thursday for Thanksgiving.

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

Posted in:mortgages and tagged: mortgages
Posted by Jonathan White on November 18th, 2016 12:56 PM

 

Compliments of

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

     

 

Central Banks See Continued Support

 

Mortgage rates improved again this week and are now near their best levels of the year. Again the improvement resulted from statements by central bankers. The economic data had little effect.

 

Statements by the heads of the International Monetary Fund (IMF), the European Central Bank (ECB), and the U.S. Fed shared the same sentiment, the global economy needs support. IMF Managing Director Lagarde described economic growth in Europe as "too slow, too fragile". ECB President Draghi said the ECB will do what ever it takes to stimulate growth and raise inflation. Inflation in the eurozone is now -0.1%. The target is 2.0%. The minutes from the U.S. Fed meeting on March 16th supported recent comments that the Fed will take a gradual approach to raising the federal funds rate. These dovish comments were well received by the bond markets, including U.S. mortgage-backed securities.

 

The economic data released this week shows that the U.S. economy is on far better footing than the overall global economy. The JOLTS report, which measures job openings and labor turnover rates, showed that job openings rose and voluntary quits increased. Both are signs of an improving labor market.

 

The ISM Services index measures expansion or contraction in the services sector of the economy. Readings above 50 indicate expansion. The index for March, at 54.5, shows that the service sector expanded again and did so at a better pace than the previous two months.

 

 

Looking ahead, the Retail Sales report will be released on Wednesday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. The consumer price index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services which are sold to consumers. Industrial production, another important indicator of economic activity, will be released on Friday.

 

 

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

 

 

 

Posted in:mortgages and tagged: Mortgage Rates
Posted by Jonathan White on April 8th, 2016 2:42 PM

 

Compliments of

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

     

 

ECB Adds Stimulus 

 

The big event over the past week was Thursday's ECB meeting. The stimulus measures announced by the ECB made investors more willing to own riskier assets such as stocks, which was negative for safer assets such as bonds. The small amount of U.S. economic data released over the past week had little impact. As a result, mortgage rates ended the week higher. 

 

The European Central Bank (ECB) added to its stimulus program to help boost economic growth and raise inflation. The actions included cutting key interest rates and increasing the size of its asset purchase program to 80 billion euros each month from 60 billion previously. Increased demand for bonds from the ECB helps keep down yields around the world, including U.S. mortgage-backed securities (MBS). These measures were essentially in line with investor expectations, however, so their effect on mortgage rates had already been factored in. 

 

The ECB also announced other changes designed to help the banking sector, and these were unexpected. These measures made riskier assets such as stocks more appealing to investors. When investors show a preference for adding risk, they often reduce their exposure to safer assets, including MBS, which is not good for mortgage rates. 

 

While recent readings have shown that inflation is rising, one area has continued to exert downward pressure. The cost of imported goods dropped in February for the eighth straight month. A big reason for this has been the decline in the price of oil. Even excluding oil, the cost of other imported goods has been dropping. Lower prices for imported goods reduce inflation, which is positive for mortgage rates.

 

 

Looking ahead, there will be a Fed meeting and press conference on Wednesday. No change in the federal funds rate is expected, but the comments from the Fed could have a significant impact. Before that, Retail Sales will be released on Tuesday. Consumer spending accounts for about 70% of economic output in the U.S., and the retail sales data is a key indicator. Housing Starts, Industrial Production, and CPI will come out on Wednesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, looks at the price change for goods and services which are sold to consumers.

 

 

All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

 

 

 

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Posted in:mortgages and tagged: fed rate and mortgages
Posted by Jonathan White on March 11th, 2016 12:35 PM

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