Mortgage Rates at Historic Lows If you took out a mortgage in 2018, now could…
|For the week of February 22, 2016 – Vol. 14, Issue 8|
>> Market Update
QUOTE OF THE WEEK… “Money, if it does not bring you happiness, will at least help you be miserable in comfort.” –Helen Gurley Brown, American author, publisher, and businesswoman
INFO THAT HITS US WHERE WE LIVE … Some folks thought last week’s Housing Starts report was pretty miserable: starts dropped 3.8% in January, to sit at a 1.099 million annual rate. Yes, that’s the lowest level for housing starts in three months, but January is an iffy time to start building homes in many parts of the country. In fact, the Mid-Atlantic and Northeast regions were hit with a winter storm that the NOAA rated the fourth most impactful since 1950. And one could take comfort in the fact that starts are still up 1.8% from a year ago, with single-family starts up 3.5%. Plus, the 12-month moving average is up 9% versus a year ago, and now at its highest level since 2008.
BUSINESS TIP OF THE WEEK… Never stop learning. Every day, try to discover something new you can use to succeed. Read and talk to others about your business. Then think how you can apply these new insights to meeting your customers’ needs.
>> Review of Last Week
SHORT AND SWEET… The holiday-shortened week took off with a three-day rally and ended sweetly as the Dow and S&P 500 posted their best weekly gains since November 20. The tech-y Nasdaq did even better, up 3.9%, its largest weekly advance since the middle of July. The three major indexes were virtually unchanged on Friday, thanks to downward pressures applied by energy stocks, slammed by a fresh dip in crude oil prices, and evidence of growing inflation. The latter came when the Core Consumer Price Index (CPI) made a higher than expected 0.3% jump in January, pushing its annual gain to 2.2%, right where the Fed wants to see inflation for the next rate hike.
The week ended with the Dow UP 2.6%, to 16392; the S&P 500 UP 2.8%, to 1918; and the Nasdaq UP 3.8%, to 4504.
The bond market held on pretty well until Friday’s higher than expected read on inflation, never good for bond prices. But the 30YR FNMA 4.0% bond we watch finished the week UP .16, at $106.75. Freddie Mac’s Primary Mortgage Market Survey for the week ending February 18 reported national average 30-year fixed mortgage rates stayed at the prior week’s very attractive level. That’s where they landed after dropping six weeks in a row. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… It’s reported that 89% of people search for homes on the Internet, but only 33% buy a home they found online. More than ever, consumers are using agents to find the right home, and referrals are still the key way they find agents.
>> This Week’s Forecast
EXISTING AND NEW HOME SALES DIP, BUT CONSUMERS MAKE MORE, SPEND MORE… Like temperatures in many parts of the country, Existing Home Sales and New Home Sales dropped in January, according to the latest forecasts. But things should be looking up, as January Personal Income and Personal Spending numbers are expected to show consumers are making and spending more, always good for the housing market. An even better sign is Core PCE Prices, the Fed’s favorite inflation measure, is predicted to go up a barely there 0.1% for January. This may keep rates where they are for a while, since the Fed says it wants stronger inflation before the next hike.
>> 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 Feb 22 – Feb 26
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… Fed watchers feel our super slow economic recovery will keep the central bank from doing a second rate hike clear through the first half of 2016. Note: In the lower chart, a 2% probability of change is a 98% certainty the rate will stay the same.
Current Fed Funds Rate: 0.25%-0.5%
Probability of change from current policy: