Mortgage news from Stuart Crawford at V.I.P. Mortgage:
closely watched economic news last week was Wednesday's Fed meeting.
The FOMC statement was a little more upbeat about the economy than
expected, as the Fed upgraded its assessment of the performance of the
labor market. This was unfavorable for mortgage rates, but the reaction
was small, and mortgage rates ended the week just a little higher.
widely expected, the Fed announced that its Treasury and
mortgage-backed security (MBS) purchases will conclude at the end of
this month, and there was little reaction. Over the last few years,
these bond purchases, described as quantitative easing (QE), helped push
mortgage rates down to the lowest levels in decades. The Fed became
the eventual investor in the majority of mortgages originated during the
bond purchase program, and the Fed's balance sheet expanded to roughly
$4.4 trillion from less than $1.0 trillion in 2007.
market reaction to the end of quantitative easing took place way back in
May of last year when the Fed first indicated that it was going to
gradually wind down the program. That caused mortgage rates to increase
from historic lows. Since the announcement, the tapering has taken
place at the anticipated pace with little additional impact. Though, at
some point Fed officials will begin to reduce the size of their MBS
holdings. When the Fed makes that announcement, mortgage rates could be
The Gross Domestic Product (GDP) report released last
week showed growth at an annual rate of 3.5% during the third quarter,
exceeding the consensus forecast of 3.0%. The unexpected strength was
mostly in areas such as defense spending and exports which are unlikely
to maintain the same elevated levels in future quarters. The key
components of business investment and consumer spending grew at a slower
pace than during the second quarter. Because the details painted a
slightly less positive picture than the headline figure, the GDP data
had little impact on mortgage rates.
This week, the important
monthly Employment report will be released on Friday. As usual, this
data on the number of jobs, the Unemployment Rate, and wage inflation
will be the most highly anticipated economic data of the month. In
addition, there will be a European Central Bank (ECB) meeting on
Thursday. With the recent weak data in Europe, there is growing
pressure on the ECB to add more stimulus, and the ECB announcement could
affect our country’s mortgage rates.
Stuart can be reached at 480.553.8482.