MORTGAGE BLOGPosted On September 19, 2016
The mounting anticipation will come to a close this week with the Federal Open Market Committee (FOMC) Meeting just a day away. Mortgage rates remain calm ahead of the FOMC meeting with little change from Friday’s closing rates of 3.47%. Additionally, the home builders’ index continues to rise high this September, to match its highest reading in a decade.
Low Rates Boost New Home Construction – Contrary to the summer’s trend of refinancing applications, September’s mortgage applications have been fueled more by buyers. This surge comes in the wake of historically low mortgage rates. The National Association of Home Builders’ index jumped six points to 65 in September, the highest since last October, making it the highest since the height of the housing boom. In an official statement, the National Association of Home Builder (NAHB) attributes the increase to “more serious buyers.”
FOMC to Meet Tuesday and Wednesday – Our highlight of the week will be the FOMC meeting slated to take place this Tuesday and Wednesday with a press conference scheduled with Janet Yellen on Wednesday at 2:30 PM EST. The market continues to hinge on the Post-FOMC Statement. Earlier this year, Fed Chair Janet Yellen was quoted saying, rate hike odds have “strengthened.” However, chances of a rate hike this week fell to just 15% midday Friday, down from 30% earlier in the month. This discrepancy between earlier statements and current market activity make it harder to predict the outcome of this week’s meeting. Reuters reports a divided Fed ahead of the rate meeting, political uncertainty during an election year may also contribute to unexpected results on Wednesday.
Market May Face Uptick After Slow Summer – The Chicago Fed National Activity Index is also scheduled to be released this week on Thursday at 8:30 AM EST. This monthly index is designed to gauge overall economic activity and related inflationary pressure. The summer’s three-month average indicator showed slow movement with only slight improvements. The potential rate hike will also impact this metric.
Since last December’s benchmark interest rate increase, Fed officials were in general agreement that they might increase rates as many as four times in 2016, but have not raised rates once this year. Other variables like slowed economic growth could cause interest rates to remain the same. We look ahead this week to the Post-FOMC Statement to further predict market activity for the remainder of the year.
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