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Fed raises rates but mortgage rates remain low in this week’s Markets in a Minute!

Fed raises rates but mortgage rates remain low in this week’s Markets in a Minute!
June 16, 2017 Fred Kreger

 

 

For the Week Ending June 16, 2017

I remember a time that the stock market would go wild in the days leading up to a Fed announcement about interest rates. This week at the FOMC
meeting, the Fed raised interest rates by ¼ percent. The announcement came out on Wednesday

afternoon at 3:15PM, and investors reacted with little more than a yawn. The stock market ticked up about 80 points in the last 45 minutes of
the trading day. By historical standards over the last 2 years, this movement in the market was equivalent to virtually no reaction. The interest rate increase by the Fed was expected by investors. The Fed has indicated that based upon current economic conditions
and growth patterns, one additional rate increase is anticipated before the end of 2017.

 

The first half of 2017 the housing market has been very active. Recent surveys of real estate and mortgage professionals around the country has indicated, that in many parts of the country, the typical summer slow-down
might be taking hold. The housing market remains quite active however activity has seemed to tail off slightly in many areas.

Builder sentiment reflects the recent slight slowdown in activity. The latest housing market index, which measures builder optimism, showed a slight drop from 69 to 67. Overall the index remains very strong so by
no means is this slight drop indicative of future problems for housing. In fact, the housing market index for future sales rose to an unusually high level of 76.

 

There have been more and more articles in recent weeks in which housing experts are discussing the possibility of an abnormally active Fall market. It appears that homeowners are recognizing the growth in their home
equity that has taken place in the last 24 months. Some homeowners are beginning to believe that it might be time to “take the money and run”.

 

In many markets around the country, more homes have come up for sale in the last 30 days. This has not necessarily translated into more inventory as homes are still selling as fast as they are listed because of all
the pent-up demand. An increase in home listing in the month of June is NOT a common occurrence. Typically, new listings tend to decline in the summer months as schools let out and more families take their summer vacations.

 

Mortgage rates decline, and refinance applications tick up. For the week ending June 9th, applications for refinancing jumped 9.0 percent according to the Mortgage Bankers Association. Purchase applications declined
by a seasonally adjusted 3.0 percent. The Memorial Day Holiday likely played a role in the slight drop for the week.

 

Next week there are very few reports that might influence investor decisions. Expect the stock market to remain relatively flat unless some geopolitical events impact the United States. Next week’s potential market
moving reports are:

• Wednesday June 21st – MBA Mortgage Applications, Existing Home Sales
• Thursday June 22nd – First Time Jobless Claims, FHFA House Price Index
• Friday June 23rd – New Home Sales

 

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way
I possibly can.

 

Please enjoy this quick update on what happened this week in the housing and financial markets.

 

 

The Fed raised policy rates by 0.25% as expected at this week’s FOMC meeting. However, the Fed doesn’t control mortgage rates, which actually improved slightly.
Inflation rates released this week came in below the expected level. Low inflation helps provide an environment for mortgage rates to remain low as well.
12 of 16 Fed members signaled they expect to increase rates at least once more this year. Markets have been slow to react to the news though.

 

The number of homes on the market in May fell 10.9% year-over-year, marking 20 straight months of year-over-year declines. However, sales increased 7.5%.
The typical home is currently under contract after an average of 37 days. More than a quarter of homes listed are selling for more than the asking price.
Rising prices are bringing out home flippers again. More than 2/3 of the 44k single family homes flipped in the 1st quarter were by mom-and-pop investors.

Seller to Agent: You’ve done such a great job describing my house in your real estate listing that I’ve decided to keep it!

 

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These
rate trends can differ from our own and are subject to change at any time.

Sincerely,

Fred Kreger
American Family Funding
Certified Mortgage Consultant
NLMS # 1850 / 214640 BRE# 01215943 / 01371184
(661) 505-4311
Fred.Kreger@affloans.com
28368 Constellation Road
Suite 398
Santa Clarita, CA
91355

www.fredkreger.com

 

©2017 American Pacific Mortgage Corporation. All information contained herein is for informational purposes only and, while every effort has been made to insure accuracy, no guarantee is expressed or implied. Any programs shown
do not demonstrate all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products
may not be available in all states and restrictions apply. Licensed by the Department of Business Oversight under the CRMLA.

 

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