For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.
By G. Steven Bray
Even though mortgage rates drifted slowly lower last week, I would call the risks of higher and lower rates fairly balanced at this time.
European economies are showing nascent signs of recovery, but China is slowing. The US economy isn’t booming, but it isn’t collapsing. On a more granular scale existing home sales hit their highest level in years while new home sales took a dive. Employment growth continues unabated while wage growth continues to be stagnant.
This contradictory data combined with the typical summer doldrums is leaving markets looking for direction. I doubt they’ll find it in this week’s Fed meeting. While the Fed is widely expected to announce a rate hike in Sep, it’s unlikely it will change its posture this week.
The most meaningful data this week may be Friday’s release of 2nd quarter GDP numbers. While this is backward looking data, markets may view a strong reading as giving the Fed a green light to raise rates in Sep.
But just because the Fed raises rates doesn’t mean mortgage rates are going to rise. The Fed directly influences very short-term rates. Longer-term rates, such as mortgage rates, are more heavily influenced by expectations of economic growth and inflation, and on that we have our contradictory data.
Sorry, the comment form is closed at this time.