Mortgage Market in Review – July 27, 2015

July 27, 2015
Market Comment

Mortgage bond prices finished the week higher which put downward pressure on rates. Rates were negative the beginning of the week tied to the 7 billion euro Greek bridge loan. Rates recovered the remainder of the week tied to stock weakness. The FHFA Housing Price Index rose 0.4% versus the expected 0.3% increase. Existing home sales were also higher than expected. Leading Economic Indicators rose 0.6% versus the expected 0.2% increase. Weekly jobless claims were 255K versus the expected 278K. Continuing claims were 2207K versus the expected 2212K. Mortgage interest rates finished the week better by about 1/8 to 1/4 of a discount point.

LOOKING AHEAD

Economic
Indicator		 Release
Date & Time		 Consensus
Estimate
Analysis
Durable Goods Orders Monday, July 27,
8:30 am, et		 Down 0.5% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
Consumer Confidence Tuesday, July 28,
10:00 am, et		 99.8 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction Tuesday, July 28,
1:15 pm, et		 None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
5-year Treasury Note Auction Wednesday, July 29,
1:15 pm, et		 None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Fed Meeting Adjourns Wednesday, July 29,
2:15 pm, et		 No rate changes Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless Claims Thursday, July 30,
8:30 am, et		 262K Important. An indication of employment. Higher claims may result in lower rates.
Q2 Advance GDP Thursday, July 30,
8:30 am, et		 Up 0.6% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction Thursday, July 30,
1:15 pm, et		 None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q2 Employment Cost Index Friday, July 31,
8:30 am, et		 Up 0.6% Very important. A measure of wage inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, July 31,
10:00 am, et		 93.7 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Higher Rates

Mortgage rates have generally risen from their recent lows but remain very favorable. The march to higher rates came amid continued warnings from Fed officials of possible Fed rate hikes starting in September. Many signs show the US economy is heading in the right direction. Unemployment is low and housing prices have risen. A basic economic concept is rates will rise when the economy is doing well. However, these are unusual times for sure. The future is murky at best and where rates are going is unknown. We do know rates have risen recently and are likely to be volatile into the future. Now is a great time to take advantage of rates near historic lows and reduce the uncertainty of a future purchase or refinance.


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