Mortgage rates have bounced around a bit over the past week, but still staying in a rather narrow range. However, whether this range is the highest rates will be in the near term or the lowest they’ll be in the near term depends on a few factors – most recent moves in the markets have been due to remarks by Fed Members, global inflation issues, robust retail sales and the 10-year Treasury bond yield up to 4 percent.
I’ll start with that last factor, the 10-year Treasury bond yield, which mortgage rates often follow the trend of the yield. Four percent was a kind of set point we’re watching, if the yield goes above that point, mortgage rates are more likely to rise, and if it stays below, rates were likely to stay lower. As of the writing of this email, the yield is above 4 percent but not by much and trending lower.
So, based on the 10-year yield, most analysts are saying they expect rates to remain essentially steady for the near future – of course, we cannot predict the future, and rates change unexpectedly…but we love making guesses.
However, what we’re seeing is that with the lower rates over the past couple months, first-time home buyers who are often the most sensitive to housing affordability are coming back into the market, and demand for home purchases is increasing, putting pressure again on already tight inventory.
So, again, I’ll remind you that if you are considering a home purchase this year, let’s talk soon to create a solid plan for you and your home financing so that when you’re ready to jump on an opportunity, you’re ready. Feel free to text/call me at 818.307.6072 or send me an email to get the conversation going.
As for this week…
Thankfully, there are no Fed Members out speaking publicly to spook markets as the Members are in their quiet period in advance of the next Fed Meeting.
As for economic data, the week starts off pretty quiet except for a large volume of Treasury bonds being sold to raise money for the government. Analysts will be watching the level of demand for the large supply flooding the market.
On Thursday, we get a look at fourth-quarter GDP (gross domestic product,) which is expected to slow to 2.0 percent annualized growth versus third-quarter growth of 4.9 percent. Yet, the growth is still in positive territory.
For the housing market, we get a look at numbers for New Home Sales, which have been swinging sharply from month to month. After November’s lower-than-expected 590,000 annual rate, December’s consensus is a sharp rebound to 650,000.
On Friday, the Fed’s favorite inflation indicator comes out. The PCE Index readings on inflation for December are expected at monthly increases of 0.2 percent versus 0.1 percent contraction overall in November. Annual rates are expected at 2.7 percent overall and 3.0 percent for the core (versus November’s 2.6 and 3.2 percent).
