Mortgage Market Update
Mortgage Market Update- April 14, 2013
The bond market was largely stagnant this week in spite of mixed news that probably should have made a difference. Between the release of President Obama’s budget, the saber-rattling of North Korea and the news the Fed may be considering shortening their bond-buying program, many would have expected rates to drop further than they already have. This was not the case however, in fact, the bond rates finished the week nearly unchanged from last week.
In other news
While the news from the Fed was slightly troubling, the current conventional wisdom is they will reconsider after the weak economic news, specifically the jobs report. When you combine this news with the .4 percent decline in retail sales, largely blamed on the payroll tax increase that went into effect in January, you would think the bond market would have reacted and prices would have dropped. However, most investors took a big-picture view of these numbers because when you average them out, sales and jobs gains are stronger over the first quarter of the year, even with the sluggish numbers reported in March.
Much of the news had little impact on the bond market this week including Greece reporting a record 27 percentunemployment rate. In addition, Core Producer Price Index Inflation was reported to be almost 2 percent than it was a year ago, consumer sentiment is more negative than at any time since July of 2012 and gold traded below $1,500 an ounce, which is lower than it has trade in more than a year.
The upcoming week will be busy and most bond buyers and mortgage lenders will be watching carefully the following numbers:
- CPI (Consumer Price Index) will be released on Tuesday along with housing starts and Industrial Production numbers. CPI will be carefully monitored because this number will show just how much overall prices have changed for consumers.
- Housing starts may have an impact on the bond market; even a modest increase in starts may mean a slight uptick in rates.
- On Wednesday we’ll see the Beige Book report from the Fed where data from eight different economic areas get reviewed to create a snapshot of the overall economy.
- The Philadelphia Feds report is also due on Thursday and finally, the Empire State and Leading Indicators reports which will provide a glimpse at manufacturing growth or stagnation.
While the stock market finished Friday in negative territory, it is important to put this into perspective. Overall, the market increased 2 percent over the week. Generally, this “good news” would be bad news for the bond market but this week it seems to have been greeted largely with a yawn. Mortgage rates remained at their lowest since last fall, but we should not expect that to remain unchanged.
The overall economy seems to be gaining some momentum if you look at the numbers over a quarter versus the snapshot of the weaker numbers reported during March. Core Mortgage Financial wants to remind those who are considering buying a home or refinancing their existing mortgage that rates may not stay this low. Give us a call today and let’s figure out if this is a good time to consider locking in your rate before the rates start their upward trend.