Weekly Economic Update - 5.21.18
I hope you had a great weekend.
RATE MOVEMENT (from prior week) HIGHER! **Rates are at a 7 Year High!**
The market moving economic news last week was viewed as negative for mortgage rates. This time the source was the European Central Bank (ECB). The U.S. economic data mostly came in on target and caused little reaction, but mortgage rates reached the highest levels in seven years, further evidencing most expert predictions that lower rates are a thing of the past.
IMPORTANT ECONOMIC FACTORS:
ECB (European Central Bank) - On Monday, a speech from a top ECB official was viewed by investors as unexpectedly “hawkish”, meaning in favor of tighter monetary policy. The governor of the Bank of France said that the ECB might soon provide guidance about the timing of its first rate hike in years. While investors anticipate that the ECB will end its bond buying program later this year, they were somewhat surprised by the talk about rate hikes, and some investors viewed his speech as opening the door for rate hikes to take place sooner than expected. Bond yields around the world moved higher after the speech, including U.S. mortgage rates.
Retail Sales – Next to the Employment data, the report on retail sales is one of the most closely watched each month. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator of growth. Following the hurricanes, retail sales showed very strong gains for three months last fall. Sales then unexpectedly posted three months of losses, causing investors to worry that economic growth was slowing. However, the most recent data released this week showed a healthy increase in April of 0.3% from March. Combined with the solid gains seen in March, it appears that the three weak months were not indicative of a longer-term trend.
Looking ahead this week we will get some housing data, such as New Home Sales on Wednesday and Existing Home Sales on Thursday. We are currently holding our LOCKING stance on new files as the market is volatile and there is not data to support lower rates at this particular time.
As I have stated in prior reports, I strongly believe that if anyone is interested in pursuing a mortgage financing (whether it be a purchase or refinance), the sooner the better.
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 great weekend.
SVP, Regional Manager
THE CRAWFORD TEAM