Skip to content

Mortgage Market in Review – January 23, 2017

   

Market Comment

Mortgage bond prices finished the week lower which put sharp upward pressure on rates. Rates were lower Tuesday as Brexit fears reemerged. The improvements and more were quickly erased as inflation fears and solid economic data caused prices to fall and rates to rise. Consumer inflation readings were as expected as the headline figure rose 0.3% and the core, which excludes volatile food and energy, rose 0.2%. Housing starts were 1226K versus the expected 1195K. Weekly jobless claims were a lower than expected 234K. Analysts looked for a reading of 252K. The Philadelphia Fed business conditions index was 23.6 versus the expected 15 level. The Fed Beige Book indicated the Fed sees wages increasing in most areas and is optimistic about economic growth. Mortgage interest rates finished the week higher by about 3/8 to 1/2 of a discount point.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Treasury Auctions Begin Tuesday, Jan. 24,
1:15 pm, et
None Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday.
FHFA House Price Index Wednesday, Jan. 25,
10:00 am, et
Up 0.6% Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, Jan. 26,
8:30 am, et
235K Important. An indication of employment. Higher claims may result in lower rates.
Leading Economic Indicators Thursday, Jan. 26,
10:00 am, et
Up 0.2% Important. An indication of future economic activity. A smaller increase may lead to lower rates.
New Home Sales Thursday, Jan. 26,
10:00 am, et
595K Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Q4 Advance GDP Friday, Jan. 27,
8:30 am, et
Up 3.4% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Durable Goods Orders Friday, Jan. 27,
8:30 am, et
Down 1.2% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Jan. 27,
10:00 am, et
98.2 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Higher Rates

Dallas Federal Reserve President Robert Kaplan made recent remarks that caused mortgage-backed security prices to fall and interest rates to rise. Kaplan indicated he saw upside risks to energy prices in the next few years. He also noted the labor market remains tight and urged the Fed to think about removing accommodation and shrinking their balance sheet. He said it is “reasonable to be having that debate and discussion sometime in 2017 about at least what our plan of action should be.” The Fed kept mortgage rates historically low by reinvesting proceeds from their holdings back into Treasury and mortgage bonds. Reversing course will lead to higher rates.

Mortgage interest rates remain historically favorable despite some recent volatility. There are no guarantees these rates will last forever so a cautious approach to float and lock decisions is wise.


Copyright 2016. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.