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Mortgage Market in Review – September 22, 2016

Newsletter-September 19th, 2016     
Kane Smeltz
President
nmls #142948
Kane Mortgage, Inc.
Lic PA D.O.B; nmls 51058
4755 Linglestown Rd, Suite 205
Harrisburg, PA 17112
Phone: (717)541-5132
E-Mail: ksmeltz@kanehomeloans.com
Website: https://www.kanehomeloans.com
   
   

Market Comment

Mortgage bond prices finished the week near unchanged which kept rates steady. There was some seesaw trading but within a relatively narrow margin as the possibility of a Fed rate hike in the short term waxed and waned. Fed Governor Lael Brainard made dovish remarks which surprised traders who were prepared for a signal of a rate hike. Producer prices were unchanged versus the expected 0.1% increase. The core, which excludes volatile food and energy prices, rose 0.1% as expected. Retail sales fell 0.3% versus the expected 0.1% decrease. Consumer prices rose 0.2% slightly higher than the expected 0.1% increase. The core rose 0.3% versus the expected 0.2% increase. There was some flight to safety MBS buying Friday morning as shares of Deutsche Bank plunged 8%. Mortgage interest rates finished the week unchanged.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
NAHB Housing Index Monday, Sept. 19,
10:00 am, et
60 Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates.
Housing Starts Tuesday, Sept. 20,
8:30 am, et
1222K Important. A measure of housing sector strength. Weakness may lead to lower rates.
Fed Meeting Adjourns Wednesday, Sept. 21,
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, Sept. 22,
8:30 am, et
258K Low importance. A significantly large increase may lead to lower mortgage interest rates.
FHFA House Price Index Thursday, Sept. 22,
10:00 am, et
Up 0.6% Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.
Existing Home Sales Thursday, Sept. 22,
10:00 am, et
5.4M Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
10-year Treasury TIPS Auction Thursday, Sept. 22,
1:15 pm, et
None Important. TIPS will be auctioned. Strong demand may lead to lower mortgage rates.

Globalization

Economic globalization is the increasing interdependence of national economies through trade, finances, and technology. While economists debate the pros and cons of globalization, the fact remains that globalization is not new and continues to expand.

As a driving force in the global economy, the US often benefits when foreign economies struggle. Investors often move funds to safe havens in what is called a “flight to quality” in uncertain times. US debt instruments saw an influx of foreign investment over the past few years amid concerns of nations defaulting on their debt and various banking institutions struggling. Bond prices rose, which caused mortgage interest rates to fall. From a short-term perspective it was great for U.S. homebuyers and those refinancing as they took advantage of the drop in rates. However, what goes up often comes down and we have witnessed some reversal of the flight to quality buying of US debt from time to time as the Eurozone showed some signs of stability. Nobody can say with certainty how it will all play out. Stability isn’t growth and bailout money can’t last forever. As a result, we should expect continued mortgage interest rate volatility.

Now is a great time to take advantage of historically low mortgage interest rates.

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.

 
   MORTGAGE MARKET IN REVIEW Newsletter-September 19th, 2016