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What’s Ahead For Mortgage Rates This Week – November 09, 2015

November 9, 2015 by Kay Monigold

Whats Ahead For Mortgage Rates This Week November 09 2015Last week’s economic reports included releases on construction spending and several labor-related reports including ADP payrolls, Non-Farm payrolls, average hourly earnings and weekly jobless claims. Freddie Mac reported that mortgage rates rose as the national unemployment rate decreased to 5.00 percent.

Labor Reports Show Mixed Results

Key readings on employment showed mixed results as ADP payrolls decreased to 182,000 from September’s downwardly revised reading of 190,000 private sector jobs added. U.S. jobs expanded to a reading of 271,000 jobs added in October, which exceeded expectations of 180,000 jobs added and September’s reading of 137,000 jobs added. This was the fastest pace for job growth in 2015 and fueled expectations that the Federal Reserve may raise interest rates in December. In addition, the national unemployment rate dropped to 5.00 percent in October, which was the lowest unemployment rate in seven years.

Weekly jobless claims rose by 276,000 new claims, which exceeded the expected reading of 263,000 new claims and the prior week’s reading of 240,000 new claims.

In testimony before The House Financial Committee, Federal Reserve Chair Janet Yellen said that the central bank’s objective was to regulate financial institutions “in a manner that promotes the stability of the financial system as a whole.” This indicates that the Federal seeks to prevent threats to major financial institutions that could result in a repeat of the great recession in 2008.

Chair Yellen also said that the Federal Reserve Board and the FDIC have written a rule requiring the largest financial institutions to show that any financial failure could be “resolved in an orderly manner through the bankruptcy court.” These comments suggest that the Federal Reserve has ongoing concerns about the stability of the largest financial institutions and the economy; this could cause the Fed to take a wait-and-see attitude on raising interest rates in December. The Fed is expected to address interest rates in its December meeting of the Federal Open Market Committee, which directs monetary policy for the Fed.

Mortgage Rates Rise, Construction Spending Dips

Average mortgage rates rose across the board last week according to Freddie Mac. The average rate for a 30-yar fixed rate mortgage rose by 11 basis points to 3.87 percent; the average rate for a 15-year fixed rate mortgage rose by 11 basis points to 3.09 percent and the average rate for a 5/1 adjustable rate mortgage rose by seven basis points to 2.96 percent. Discount points were unchanged at 0.60, 0.60 and 0.40 percent respectively.

Construction spending slowed in September to a reading of 0.60 percent which met expectations based on August’s reading of an increase of 0.70 percent.Construction spending slows as fall and winter seasons approach, but analysts are monitoring construction activity as low inventories of available homes continue to increase demand for homes and home prices in many areas.

What’s Ahead

Next week’s scheduled releases for economic reports are slim; no reports are scheduled for Monday and Tuesday markets are closed for the Veterans Day holiday. Freddie Mac will release mortgage rates on Thursday and the weekly Jobless Claims report will also be released. Other scheduled reports include retail sales, retail sales except automotive sector and the University of Michigan’s report on consumer sentiment.

Filed Under: Market Outlook Tagged With: Federal Open Market Committee, Freddie Mac, Janet Yellen

What’s Ahead For Mortgage Rates This Week – September 21, 2015

September 21, 2015 by Kay Monigold

Whats Ahead For Mortgage Rates This Week September 21 2015Last week’s economic releases included several reports related to housing. The Wells Fargo/ NAHB Housing Market Index achieved its highest reading in nearly 10 years. Housing Starts dipped in August and Building Permits issued in August exceeded July expectations. The week’s big news was actually no news. The Fed’s Federal Open Market Committee decided not to raise interest rates. Fed Chair Janet Yellen followed up on the FOMC statement with a press conference and said that the Fed is not yet ready to raise rates, but that a majority of FOMC members are prepared to raise rates before year-end.

Inflation Rate Remains Well Below Fed Benchmark

The Federal Reserve has set a goal of reaching an inflation rate of 2.00 percent as one of several considerations for raising the target federal funds rate that currently stands at 0.00 percent to 0.250 percent. The Consumer Price Index for August fell from July’s reading of 0.10 percent to -0.10 percent in August. Lower prices were driven by lower fuel costs. The dip in consumer costs was the first since January.

The Core Consumer Price Index, which excludes volatile food and energy sectors, was unchanged at 0.10 percent in August, which matches analyst expectations and July’s reading.

NAHB: Home Builder Confidence Hits Highest Level in Nearly 10 Years

The Wells Fargo/NAHB Housing Market Index reached its highest reading since November 2005 with a one-point increase to a reading of 62 in September. Readings over 50 indicate that a majority of builders are confident about housing market conditions. September’s reading was the highest since November 2005, when the NAHB Housing Market Index achieved a reading of 68.

Housing Starts Lower, But Building Permits Rise

The Commerce Department reported that August housing starts fell to a seasonally-adjusted annual reading of 1.13 million starts against projections of 1.16 million starts and 1.16 million housing starts in July. Residential building permits were higher in August with a reading of 1.17 permits issued for residential construction and 1/13 million permits issued in July.

Mortgage Rates Rise

Freddie Mac reported that mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by one basis point to 3.91 percent. The average rate for a 15-year mortgage also rose by one basis point to 3.11 percent and the average rate for a 5/1 adjustable rate mortgage also rose by one basis point to 2.92 percent. Discount points averaged 0.60 got 30-year fixed rate mortgages, 0.70 percent for 15-year mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.

What’s Ahead 

Next week’s scheduled economic news includes reports on new and existing home sales, FHFA’s House Price Index, along with regularly scheduled weekly reports on new jobless claims and mortgage rates.

Filed Under: Market Outlook Tagged With: FOMC, Janet Yellen, Market Outlook, NAHB

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