The Federal Open Market Committee dropped an unexpected gift on the stock market and mortgage markets when they announced on Wednesday that they will not be cutting back on the government stimulus program at the present time.
Virtually everyone in the mortgage, real estate and stock markets all believed for sure that this meeting is when the stimulus cutting announcement would come based upon the continual overall improvement of economic conditions. The Fed stated that although the economy continues to improve they feel that there are still too many questionable factors as to whether the economy can sustain continued growth.
Don’t miss a thing. Get breaking Santa Clarita news alerts delivered right to your inbox.
Economic reports as of late have been a little more mixed than they had hoped for or anticipated. The FOMC feels that engaging in pulling back the stimulus program at this time would negatively hurt employment as well as cause consumers to retreat back into not spending as the cost of borrowing would increase with the cutting of the stimulus program.
The stock market rallied on the news to reach new heights were as mortgage rates declined on the news prompting a sigh of relief from consumers thinking about refinancing. Even before the Fed announcement, mortgage rates have declined over the last week prompting an increase in mortgage applications for both purchases and refinances. The Mortgage Bankers Association reported that applications for purchases increased 3% whereas refinances jumped 18%.
Some of the data that kept the Fed from slowing the stimulus program is that housing starts rose in August but only because July was revised down. Recent indications show signs that the housing market may be slowing down. Housing starts in in August advanced 0.9 percent after rebounding 5.7 percent in July. The main gain in starts was led by single-family homes which increased 7.0 percent after declining 3.0 percent the prior month.
Existing home sales reported their best showing since the beginning of the recovery at an annual rate of 5.480 million in August which was well above most analyst’s expectations. The gain of 1.7 percent comes on top of July’s giant 6.5 percent surge when “panic” over rising rates moved buyers into the market.
Do you have a news tip? Call us at (661) 298-1220, or drop us a line at firstname.lastname@example.org.
The National Association of Realtors (NAR) used the word “panic” in the July report and is warning that August numbers may be skewed higher by nervous buyers. Concerns exist that because of rising mortgage rates housing may begin slowing in the coming months. This is one of the factors the Fed took into consideration in deciding to hold off on cutting the economic stimulus program. Additionally, another factor holding down sales is the lack of homes available for sale on the market. Current inventory on a national basis is 4.9 months down from 5.0 and 5.1 months in the two prior months.
Next week’s market moving reports:
- Tuesday September 24th - Case-Shiller Home Value Index & FHFA House Price Index
- Wednesday September 25th – MBA Applications, New Home Sales & Durable Goods Orders
- Thursday September 27th – First Time Jobless Claims, Pending Home Sales and GDP
Have a great weekend!
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 661-505-4300.
Source: Santa Clarita News