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Compliments of
Philadelphia Mortgage Advisors
Phone: 610.834.8700
info@phillyadvisors.com
600 W. Germantown Pike | Suite 270
Plymouth Meeting, PA 19462
Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Department of Banking & Securities, NJ Department of Banking and Insurance, the State of DE, the Florida Office of Financial Regulation and MD Mortgage Lender #23004. NMLS #128570.
   
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Strangely, mortgage rates moved higher during the second half of the week without a clear cause. The economic data released this week produced little reaction, and there was not much change in the stock market. Still, mortgage rates finished near the highest levels in several years.
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There are several big picture factors which are viewed as negative for mortgage rates, but investors have been aware of them for months. First, the supply of bonds issued by the Treasury is increasing due to larger government deficits resulting from policy changes. Yields generally need to rise to entice investors to purchase additional bonds. Second, the Fed has been very clear in stating that it is tightening monetary policy by raising the federal funds rate and reducing its enormous holdings of Treasuries and mortgage-backed securities. This also adds to the supply of bonds. Finally, global economic growth in recent months has been the strongest since the financial crisis, which could increase inflationary pressures. The only potential factor that was new this week was that oil prices reached the highest level since 2014, which also could increase the outlook for future inflation.
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Since consumer spending accounts for roughly 70% of economic activity, investors keep a close eye on the retail sales data. Following strong readings during the fall, retail sales posted unexpected declines for three straight months. However, the data for March released on Monday showed that they increased a healthy 0.6% from February, breaking the unwelcome trend.
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This week's report on housing starts was not as encouraging as the retail sales data. On the surface, overall home construction in March looked good with a stronger than expected increase from February, but this was completely due to strength in the multi-family segment. Single-family housing starts fell 4% from February, and permits to build single-family homes dropped even more to the lowest level since September 2017. This data tends to be volatile from month to month, however.
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Looking ahead, Existing Home Sales will be released on Monday and New Home Sales on Tuesday. Durable Orders will come out on Thursday. The first reading for first quarter gross domestic product (GDP), the broadest measure of economic activity, will be released on Friday. In addition, the next European Central Bank (ECB) meeting will take place on Thursday, and it could influence U.S. mortgage rates.
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All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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