Mortgage Rates Steady
Mortgage rates did not move much today even as the
mortgage bonds moved in a steady and positive direction. In the past two weeks,
we have seen the highs and the lows, and we are back again close to the lowest
levels of the month.
This week there is not too much data as I mentioned in
my last report, as the attention is now focused a bit towards the fiscal
uncertainty as several policy objectives of the Trump administration have run
into roadblocks. Specifically, investors
are concerned that tax cuts will be significantly delayed as the health care
debate seems to be front and center. The
expectation of tax cuts (and other fiscal measures) was a major contributor to
the move higher in rates and stocks after the election. To whatever extent those measures are
delayed, investors can easily question if rates and stocks are higher than they
should be.
Over the weekend, I read some more of the NAR (National
Association of Realtors) report. It stated that more consumers, especially in
rural areas and the Midwest, are growing increasingly confident in the U.S.
economy and housing this year, but renters are not so optimistic about their
ability to buy a home soon per a recent survey. In the quarterly Housing
Opportunities and Market Experience survey, years of positive job growth and
post-election hope for more improvement this year has boosted consumer
confidence in the economy to 62%, the highest share in the survey’s short
history. That’s an “extraordinary reversal,” the NAR said, rising from 54% last
quarter and 48% in March 2016.
With inventory conditions even worse than a year ago,
and home prices and mortgage rates are on an uphill climb, this combination can
be troublesome. These factors are giving
many renter households a pause about it being a good time to buy, even as their
job prospects improve and wages grow. Unless there’s a significant boost in
supply levels this spring, these constraints will unfortunately slow or delay
some prospective buyers’ pursuit of purchasing a home.”
In summary, bonds continue to move lower following the
FOMC announcement of last week. The
banks have been tight on letting the rates fall back. There is little data for
a few days, and the potential for some Brexit Drama as Britain prepares for the
next step in leaving the EU. While I do
not anticipate a face melting rally, it still would not be a bad idea to either
lock in these gains or look again at your risk levels – but if you are closing in
the next 15 days, I would lock and not worry about what the future may hold.
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