Times They Are a Changin’…How Can You Be Ready?

Going into last week’s Fed Meeting, mortgage rates had remained steady for the past couple months. We’ve watched U.S. Treasuries becoming more popular with foreign investors as the global economy has struggled to recover amidst the pandemic. This has helped mortgage rates stay low, along with the Fed’s stimulus buying of mortgage backed securities.

Well, all of the Fed bond buying looks to be shifting following the Fed’s meeting last week and mortgage rates have responded, trending higher to end last week and begin this week.

At the conclusion of the Fed Meeting, Chairman Powell announced that they would be tapering bond purchases toward the end of the year, completing their tapering by next summer. He announced a plan would be presented at the November 3rd meeting on how exactly the tapering will happen.

Mortgage rates have drifted higher on the news but remain at low levels. Good thing as we got a report from CoreLogic that the average homeowner in the U.S. has seen a 30% increase in equity over the last year! This is amazing news!! Most homeowners could conceivably carry enough equity in their homes to refinance out of Mortgage Insurance (PMI) and even help fund other important financial goals like paying for college and saving for retirement.

So if you are still paying PMI, looking to purchase a new home, or wanting to cash out, you must get in touch with me as soon as you can before rates move higher so we can look at your specific situation. I would love to help you improve your financial picture as we head into the holidays and close out 2021!

As for what I’m watching this week, it looks like inflation fears are the greatest market movers to begin the week. We have the Fed’s favorite inflation indicator – the PCE Index – due out on Friday. Monthly inflation rates are expected to slow with annual rates steady at elevated levels of 4.2 percent. This level is more than double the Fed’s comfort zone of 1-2 percent; however, Fed Chair Powell says there’s no plan to throttle inflation until the employment picture looks better. This could create a higher mortgage rate environment.

Fortunately for homeowners, the housing market does not show any signs of slowing as the leading indicator, Pending Home Sales Index, is expected to rise 0.9 percent in August after falling 1.8 and 2.0 percent in the prior two reports.

And speaking of home appreciation, Case-Shiller’s home price index has been at record levels and beating expectations again and again, month in and month out. July’s report showed a 1.6 percent monthly increase for a 19.7 percent annual rate. Incredible!