This week’s mortgage market update brings some good news, as rates are trending lower and the forecast says they may very likely stay that way. However, with several economic reports waiting to come in, volatility will be high.
This Week’s Mortgage Rates At-A-Glance
- Mortgage Rates Currently Trending: LOWER
- 7 Day Mortgage Forecast: LOWER
- This Week’s Potential Volatility: HIGH
Mortgage rates are trending lower this morning. Last week the MBS market improved by +23bps. This was enough to improve mortgage rates or fees. The MBS market was very volatile last week.
As for the forecast, there are three main events that long bond traders will be focusing on this week: 1) Brexit fallout, 2) Janet Yellen, and 3)Manufacturing Data. Brexit fallout:The financial markets (currencies, bonds and stocks) will be in a state of “flux” for the near term with tremendous volatility. But that is not so much to do with figuring out the future economic growth of Great Brittan. Instead its due to very real fear of what the fate is of the EU. We now have reports of the following nations that want to have a referendum vote: France, Holland, Italy, Austria, Finland, Hungary, Portugal and Slovakia. Yellen: Perfect timing as she will be speaking on a panel alongside the Bank of England Governor and the ECB President on Wednesday. Manufacturing Data: This is back loaded towards the end of the week. Domestically, we have Chicago PMI and our ISM Manufacturing data. But we also get the Japanese Nikkei Manufacturing PMI and the Chinese Manufacturing and Non-Manufacturing (services PMI).
Volatility will likely be high in the coming days, and even weeks, as the markets will continue to determine the ramifications of the Brexit vote. Adding to the volatility is the uncertainty of the EU and which countries will follow the UK.
Home Sale Hit Nine-Year High
In the real estate world, a recent report reveals home sales hit a nine-year high in May, as improving supply increased options for buyers. This much-needed improvement suggests the economy remains on solid footing.
The National Association of Realtors® recently stated that existing home sales increased 1.8 percent to an annual rate of 5.53 million units in May 2016, the highest level since February 2007.
April’s sales pace was revised down to 5.43 million units from the previously reported 5.45 million units. Economists polled by Reuters had forecast sales rising 1.1 percent to a 5.54 million-unit pace in May. Sales were up 4.5 percent from a year ago.
The strength of home resales further contributed to retail sales data in painting an upbeat picture of the economy. That should help calm fears about the economic outlook which were stoked by last month’s paltry job gains.
Existing home sales surged 4.1 percent in the Northeast and climbed 4.6 percent in the South. Sales in the West, which has seen a strong increase in house prices amid tight inventories, jumped 5.4 percent.
In the Midwest, sales tumbled 6.5 percent last month. However, the decrease came after a period of hefty gains.
The number of unsold homes on the market in May rose 1.4 percent from April to 2.15 million units. Supply was, however, down 5.7 percent from a year ago.