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Mortgage Market in Review – March 14, 2016

Market Comment

Mortgage bond prices finished the week lower which put upward pressure on rates.  Stock volatility and rate cuts across the globe dominated headlines.  Weekly jobless claims printed at 259K and continuing claims printed at 2,255K.  Economists expected claims at 275K and continuing claims at 2,251K.  The European Central Bank shocked the world with stronger than expected stimulus measures.  They cut their rate from 0.05% to 0% and their bank deposit rate from -0.3% to -0.4%.  They also increased monthly bond purchases from $60B euros monthly to $80B euros.  Mortgage interest rates finished the week worse by approximately 1/2 of a discount point.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Producer Price Index Tuesday, March 15,
8:30 am, et
Up 0.2%,
Core up 0.4%
Important.  An indication of inflationary pressures at the producer level.  Weaker figures may lead to lower rates.
Retail Sales Tuesday, March 15,
8:30 am, et
Up 1.4% Important.  A measure of consumer demand.  A smaller than expected increase may lead to lower mortgage rates.
NAHB Housing Index Tuesday, March 15,
10:00 am, et
59 Moderately Important.  A measure of single family housing.  Weakness may lead to lower mortgage rates.
Consumer Price Index Wednesday, March 16,
8:30 am, et
Up 0.1%,
Core up 0.2%
Important.  A measure of inflation at the consumer level.  Weaker figures may lead to lower rates.
Housing Starts Wednesday, March 16,
8:30 am, et
1108K Important.  A measure of housing sector strength.  Weakness may lead to lower rates.
Industrial Production Wednesday, March 16,
9:15 am, et
Up 0.6% Important.  A measure of manufacturing sector strength.  A lower than expected increase may lead to lower rates.
Capacity Utilization Wednesday, March 16,
9:15 am, et
77.2% Important.  A figure above 85% is viewed as inflationary.  Weaker figure may lead to lower rates.
Fed Meeting Adjourns Wednesday, March 16,
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, March 17,
8:30 am, et
272K Important.  An indication of employment.   Higher claims may result in lower rates.
U of Michigan Consumer Sentiment Friday, March 18,
10:00 am, et
91.6 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

Manage Risks

To make wise lock decisions everyone needs to be aware of two primary risks.  Those are price and event risks.  Price risk is simply where the market stands since regularly scheduled morning pricing.  Event risk is the economic data that is heading our way.  Most rate changes come in response to an economic release.  A borrower that chooses to float in front of economic events takes a very big financial risk.

 

Floating overnight when there is little data and positive movement since pricing is a calculated risk.  Floating with losses ahead of a significant release is a gamble.  Most borrowers would be wise to take advantage of current rates and then refinance in the future if rates fall more.

 
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.