Scott Synovic Mortgage Loan Originator Colorado's Mortgage Expert
  • About
  • Mortgage Blog
  • Contact
  • Apply Now

Scott Synovic CMA, CMPS, CMHS
Fairway Independent Mortgage
303.668.3350

What’s Ahead For Mortgage Rates This Week – May 31, 2016

6/3/2016

 
Picture
ILast week you didn't need to consult even one economist to be able to evaluate the state of the housing market. You just had to read the reports.

New Home Sales shot up 16.6% in April reaching a 619,000 unit annual rate, well above what the experts expected. This is the fastest pace we've seen in eight years.


The U.S. Census Bureau's new home sales data is extremely volatile month to month, so it's important to look at the trend, which has stayed positive. In fact, sales are 23.8% ahead of where they were a year ago, clearly showing a strong climb back to normal for the new homes market.

On the existing homes front, we were treated to the latest National Association of Realtors (NAR) reading on contracts signed for the purchase of those homes. The NAR Pending Home Sales index zoomed up 5.1% for the month to hit a ten-year high, landing 4.6% above April a year ago. Pending home sales have now registered year-over-year gains for 20 months in a row. The NAR's chief economist opined, "the prospect of facing higher rents and mortgage rates down the road appears to be bringing more interested buyers into the market." Lending support to this view, the Mortgage Bankers Association reported purchase mortgage applications up 5% over the week before.

Review of Last Week

There were more hints from the Fed about a rate hike this summer, but investors brushed them aside, sending all three stock indexes ahead for the week. The S&P 500 even nailed its biggest weekly gain in two months. Thursday, Fed governor Jerome Powell said rates could rise "fairly soon." Friday, Fed Chair Janet Yellen told a Harvard audience the central bank is ready to raise rates "gradually and cautiously...over time" unless economic data takes a turn for the worse. Well, monthly economic data keeps turning in both directions. Yellen herself alluded to this, noting that wage growth is not accelerating, showing there's still slack in the labor market.

Most economists figure the Fed will skip a June hike, then act in July. Meanwhile, everyone could feel encouraged by the excellent housing data covered above, as well as by the unexpectedly strong numbers for Durable Goods Orders in April. As usual, this good stuff got balanced by some not so good items. The second estimate of first quarter GDP pegged economic growth at a very weak 0.8% annual rate, while the University of Michigan Consumer Sentiment survey for May missed estimates. Sniffing around for more good stuff, last week's Initial Unemployment Claims dropped by 10,000, to 268,000, chalking up 64 weeks in a row that number's been below 300,000.

The week ended with the Dow UP 2.1%, to 17873; the S&P 500 UP 2.3%, to 2099; and the Nasdaq UP 3.4%, to 4934.

Upward moving stocks and the Fed Chair's hints of an impending rate hike hurt bond prices, especially Treasuries. Nonetheless, the 30YR FNMA 4.0% bond we watch finished the week unchanged, at $106.67. National average 30-year fixed mortgage rates were up only slightly in Freddie Mac's Primary Mortgage Market Survey for the week ending May 26. Their chief economist added that May posted "the lowest monthly average in three years." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.

Last week, stocks surged on the heels of the terrific New Home Sales data, pushing the Dow and the S&P 500 into positive territory for the month. Clearly, housing market strength is important to investors.

This Week’s Forecast

The Fed's favorite measure of inflation is Core PCE Prices and Fed hawks will be watching it like said bird this week. Unfortunately, it's forecast up, which could encourage the central bankers to hike rates in June. Meanwhile, manufacturing slogs along, barely showing growth (above 50) in both the nationwide ISM Index and the Midwest region's Chicago PMI. Friday sees the May jobs report, and the experts expect more hanging on with a tepid 160,000 new Non farm Payrolls forecast, though Hourly Earnings should show a gain, so those working get a bit more to spend.

The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of May 30 – Jun 3

May 31    08:30    Personal Income
May 31    08:30    Personal Spending
May 31    08:30    Core PCE Prices
May 31    09:45    Chicago PMI
May 31    10:00    Consumer Confidence
Jun 1    10:00    ISM Index
Jun 1    14:00    Fed's Beige Book
Jun 2    08:30    Initial Unemployment Claims
Jun 2    08:30    Continuing Unemployment Claims
Jun 2    11:00    Crude Inventories
Jun 3    08:30    Average Workweek
Jun 3    08:30    Hourly Earnings
Jun 3    08:30    Non farm Payrolls
Jun 3    08:30    Unemployment Rate
Jun 3    08:30    Trade Deficit
Jun 3    10:00    ISM Services
                                                                                                           
Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months... Despite Janet Yellen's comments last week, most economists do not think there will be rate gain in June, though small hikes in July and September are expected. Note: In the lower chart, a 28% probability of change is a 72% certainty the rate will stay the same.

Current Fed Funds Rate: 0.25%-0.5%

After FOMC meeting on:   
 

Jun 15    0.25%-0.50%
Jul 27    0.50%-0.75%
Sep 21    0.75%-1.00%

Probability of change from current policy:

After FOMC meeting on:    


Jun 15    28%
Jul 27    61%
Sep 21    68%

Call me today 303.668.3350 for answers to any of your mortgage questions, or Apply Now!

Scott Synovic is a top performing mortgage loan originator providing superior levels of service and satisfaction to clients and business partners in Colorado - www.scottsynovic.com NMLS #253799 Fairway Independent Mortgage Corporation #2289

Comments are closed.
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    APPLY NOW

    Archives

    February 2023
    January 2023
    December 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015

    Categories

    All

    RSS Feed

popular pages

Refinance
Eliminate PMI
Consolidate Debt
Mortgage Calculators
How Much is My Home Worth?
Interest Rates

Company

About Fairway Independent Mortgage Corporation
Financing Disclaimer
Contact

mortgage insight

join now
Communications Consent
Picture
Scott Synovic NMLS #253799 Fairway Independent Mortgage NMLS #2289
NMLS Consumer Access. Fairway Independent Mortgage Corporation
950 South Cherry Street, Suite #1515, Denver, Colorado 80246

Equal Housing Lender licensed through NMLS Regulated by the Division of Real Estate.
​Licensed Mortgage Loan Originator licensed in Colorado and California.
Not endorsed or sponsored by either state or any government agencies.

Picture
Picture
Picture
Featured in The Denver Post and 5280 Magazine as a Five Star Mortgage Professional
© Copyright 2022. All Rights Reserved.
  • About
  • Mortgage Blog
  • Contact
  • Apply Now