Mortgage Market Update - 2.19.18
I hope your week is off to a good start.
RATE MOVEMENT (from prior week) NO CHANGE
While there was some volatility, it was a relatively quiet week for mortgage rates. The major economic data was mixed, and in a nice break from the recent upward trend, mortgage rates ended the week with little change.
IMPORTANT ECONOMIC FACTORS:
Housing Starts - The latest report on housing starts was encouraging as single-family housing starts rose 4% from December to January (they were 8% higher than a year ago). A lack of inventory has been holding back home sales in many regions, so it's good to see that home builders appear to be picking up the pace of construction.
Retail Sales - Unlike the housing data, the report on retail sales was disappointing, as they were flat from December to January (which was far below the expected increase of 0.5%). The results for December were revised significantly lower as well. Since weaker economic growth reduces the outlook for future inflation, this data was positive for mortgage rates.
CPI (Consumer Price Index) - Offsetting the weakness in retail sales, an upside surprise in the latest report on current inflation levels was decidedly negative for mortgage rates. In January, the core CPI (which excludes the volatile food and energy components) rose 0.3% from December, which was higher than expected. Core CPI was 1.8% higher than a year ago, which also was a faster rate of increase than expected. Bond yields, including mortgage rates, must rise to offset higher inflation.
Looking ahead, it will be a very light week for economic data. Existing Home Sales will be released on Wednesday along with the minutes from the January 31st Fed meeting. These detailed minutes provide additional insight into the debate between Fed officials about future monetary policy and have the potential to move markets. We will see if the Fed can agree on any future Rate Hike revisions.
Please let me know if you have any questions in regards to this, or if there is anything we can do for you.
Thank you for your continued support, have a productive week.
SVP, Regional Manager