The Fed met this past week. As expected, they didn’t hike rates and the Fed Statement was very “dovish,” suggesting that rate hikes will be off the table for most, if not all, of 2019.

The Fed looked to “muted inflation” and slowing economies abroad as reasons to show “patience” in hiking rates further.

In response, home loan rates revisited the best levels of 2019 this past week.

This new position by the Fed is a complete departure from where they were just a few months ago, when Fed Chair Powell was forecasting 3 rate hikes this year.

People owning stocks are feeling wealthier as shares hit a multi-month high this week after rallying 14% since Christmas. This is good for housing.

Job creations and wage growth are also fundamental to a healthy housing market and last week’s positive Jobs Report showed steady growth in both.

More good news the mortgage industry: the Mortgage Bankers Association just released a forecast suggesting that 30-year mortgage rates will remain below 5.00% through 2020.

The upcoming week will be a dramatic change from last week with no major risk-filled events like the Fed meeting and Jobs Reports.

There are just a few economic reports to be delivered, though the markets will have to contend with the ongoing U.S.-China trade issues along with another looming government shutdown on February 15.

The bond markets will also have to digest a total of $84 billion in notes and bonds being auctioned by the Treasury. At times, these auctions can limit rate improvement.

Overall, with the Fed now more patient and inflation a non-issue we should not expect home loan rates to meaningfully tick higher anytime soon. At the same time, with the U.S. economy continuing to be on solid footing, it’s likely that further rate improvement will be limited.

Reports to watch:

  • The ISM Service Index will be released on Tuesday, followed by Productivity on Wednesday and Weekly Initial Jobless Claims on Thursday.

Related Articles

The economic data coming out of the US this week showed that not only is a recession highly unlikely anytime soon, but the economy is actually reaccelerating from the slowdown seen last Fall. Back in October and November, the Fed was very hawkish and suggested that three rate hikes would…
Read More of the post Fed Sparks Economic Reacceleration

Initial Jobless Claims is a weekly report that tracks how many people have filed for unemployment benefits. It is both a solid gauge on the state of the labor market and economy, and a leading indicator on what to expect in the months ahead. So, what are Initial Jobless Claims…
Read More of the post Let the Good Times Roll

"It's getting better all the time" (The Beatles) That is the best way to describe the current home loan rate environment. This past week we saw mortgage rates experience their largest one-week decline in 10 years! What caused the sharp decline in home loan rates? Recessionary fears, and the likelihood…
Read More of the post Yield Curve Inversion Explained

The monetary authority of the United States, the Federal Reserve, meets 8 times a year to discuss the economy and adjust monetary policy to promote maximum employment and maintain price stability (inflation). The Fed, led by Chairman Jerome Powell, met this past Wednesday and decided to leave the Fed Funds…
Read More of the post Thank You, Mr. Powell