August 15th, 2014 12:43 PM by Jonathan White
Mortgage Market News for the week ending August 15, 2014
President and CEO
Mortgage Broker | NMLS ID: 3443
Blue Door Mortgage, LLC
Co. NMLS MB2218
20 Walnut Street
Wellesley, MA 02481
Global Growth Concerns
in the conflict in Ukraine was favorable for mortgage rates this week.
Concern about the pace of global economic growth also was positive
for mortgage rates, which ended the week near the lowest levels of the
remain very sensitive to geopolitical events. This was evident on Friday
when news services reported that Ukrainians destroyed part of an armed Russian
convoy which had crossed the border into Ukraine. A shift to safer
assets quickly took place, causing stocks to decline and increasing
the demand for bonds, including mortgage-backed securities (MBS). This
added demand for MBS pushed mortgage rates lower.
about the conflict in Ukraine is that it will reduce the level of
economic activity in Europe. Euro zone second quarter GDP data released
this week revealed very weak growth. Sanctions imposed on Russia
are adding to the burden, and any additional sanctions would create an
even larger obstacle for the economies in the region to overcome.
In the US,
the economic news showed that some parts of the economy are slowing as
well. The biggest report was Retail Sales, which account for
roughly 70% of US economic activity. During the end of the first
quarter, Retail Sales showed a nice bounce back from depressed levels
due to unusually severe winter weather. The momentum did not continue,
though. For the last several months, the gains in Retail Sales have
been diminishing, and the July data showed no increase from June.
Slower economic growth reduces future inflationary pressures, which is
positive for mortgage rates.
investors will continue to closely monitor the situation in Ukraine. In
the US, the Consumer Price Index (CPI), the most closely watched monthly
inflation report, will come out on Tuesday. CPI looks at the price change
for finished goods which are sold to consumers. Housing Starts also will
be released on Tuesday. The FOMC Minutes from the July 30 Fed
meeting will be released on Wednesday. These detailed Minutes provide
additional insight into the debate between Fed officials. Existing Home
Sales and Philly Fed will come out on Thursday.