Mortgage Times
#1
03-23-2007, 05:07 PM
Mortgage Times
Mortgage Markets Unchanged After Fed Meeting
The biggest news last week was Wednesday’s Fed policy meeting. As was universally expected, the Fed held interest rates unchanged at 5.25%. Investors, hoping to find out the influence of recent turmoil in the stock market and the subprime mortgage sector, were somewhat surprised that the accompanying statement made no explicit mention of these issues. When all the dust settled, mortgage rates ended the week unchanged from the prior week, and they have barely moved at all in March.
The most notable change in the Fed’s statement was the removal of its bias to raise rates, which leaves the Fed with more flexibility to lower rates in the future without surprising investors. The overall message from the Fed was that its policy will continue to be determined by future economic data. The Fed continued to emphasize that inflation was its primary concern, and its outlook on economic growth was less optimistic than at the prior meeting in January. As a result, investors modestly raised their expectations for a rate cut during the first half of the year.
Aside from the Fed meeting, two major reports from the housing sector were released last week, and the results were mixed. February Housing Starts came in higher than expected, following a sizable decline in January, typical of the volatility seen during the winter months. In contrast to the strong Housing Starts number, February Building Permits fell short of the forecasts, leaving the report roughly neutral for the housing market. Friday’s February Existing Home Sales data showed an unexpected surge in sales, although the good news was offset somewhat by an increase in inventories and a small decline in median prices. In short, the housing market appeared to be holding steady.
[ul][*]Also Notable: [*]As expected, the Fed held interest rates unchanged at 5.25%[*]February Existing Home Sales data showed an unexpected surge in sales, along with a small increase in inventories[*]February Housing Starts came in higher than expected, following a sizable decline in January[*]46 former and current Fannie Mae executives will not receive potentially $44.4 million in bonuses due to misstated earnings[/ul]Average 30 yr fixed rate: Last week:+0.02%This week:+0.00%Stocks (weekly): Dow:12,487+362NASDAQ:2,450+77
WEEK AHEAD
A wide range of important economic data will be released next week. The report on New Home Sales will kick things off on Monday. Next, Wednesday’s Durable Orders report will be an important indicator of future economic activity. The final revision to Fourth Quarter 2006 Gross Domestic Product (GDP) will come out on Thursday. GDP is the broadest measure of economic activity, and the quarterly data is revised twice as additional information becomes available. The Fed’s preferred inflation indicator, the Core PCE price index, will be revealed on Friday, along with the Chicago PMI national manufacturing index. Finally Consumer Confidence and Consumer Sentiment will round out a busy schedule.
The biggest news last week was Wednesday’s Fed policy meeting. As was universally expected, the Fed held interest rates unchanged at 5.25%. Investors, hoping to find out the influence of recent turmoil in the stock market and the subprime mortgage sector, were somewhat surprised that the accompanying statement made no explicit mention of these issues. When all the dust settled, mortgage rates ended the week unchanged from the prior week, and they have barely moved at all in March.
The most notable change in the Fed’s statement was the removal of its bias to raise rates, which leaves the Fed with more flexibility to lower rates in the future without surprising investors. The overall message from the Fed was that its policy will continue to be determined by future economic data. The Fed continued to emphasize that inflation was its primary concern, and its outlook on economic growth was less optimistic than at the prior meeting in January. As a result, investors modestly raised their expectations for a rate cut during the first half of the year.
Aside from the Fed meeting, two major reports from the housing sector were released last week, and the results were mixed. February Housing Starts came in higher than expected, following a sizable decline in January, typical of the volatility seen during the winter months. In contrast to the strong Housing Starts number, February Building Permits fell short of the forecasts, leaving the report roughly neutral for the housing market. Friday’s February Existing Home Sales data showed an unexpected surge in sales, although the good news was offset somewhat by an increase in inventories and a small decline in median prices. In short, the housing market appeared to be holding steady.
[ul][*]Also Notable: [*]As expected, the Fed held interest rates unchanged at 5.25%[*]February Existing Home Sales data showed an unexpected surge in sales, along with a small increase in inventories[*]February Housing Starts came in higher than expected, following a sizable decline in January[*]46 former and current Fannie Mae executives will not receive potentially $44.4 million in bonuses due to misstated earnings[/ul]Average 30 yr fixed rate: Last week:+0.02%This week:+0.00%Stocks (weekly): Dow:12,487+362NASDAQ:2,450+77
WEEK AHEAD
A wide range of important economic data will be released next week. The report on New Home Sales will kick things off on Monday. Next, Wednesday’s Durable Orders report will be an important indicator of future economic activity. The final revision to Fourth Quarter 2006 Gross Domestic Product (GDP) will come out on Thursday. GDP is the broadest measure of economic activity, and the quarterly data is revised twice as additional information becomes available. The Fed’s preferred inflation indicator, the Core PCE price index, will be revealed on Friday, along with the Chicago PMI national manufacturing index. Finally Consumer Confidence and Consumer Sentiment will round out a busy schedule.
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