Retail Sales Rebound

Strangely, mortgage rates moved higher during the second half of the week without a clear cause. The economic data released this week produced little reaction, and there was not much change in the stock market. Still, mortgage rates finished near the highest levels in several years. 

Pricing is -.125 to -.25 worse vs last Friday.  More rate hikes are expected this year so make sure you are not playing the market and lock in your loans!

There are several big picture factors which are viewed as negative for mortgage rates, but investors have been aware of them for months. First, the supply of bonds issued by the Treasury is increasing due to larger government deficits resulting from policy changes. Yields generally need to rise to entice investors to purchase additional bonds. Second, the Fed has been very clear in stating that it is tightening monetary policy by raising the federal funds rate and reducing its enormous holdings of Treasuries and mortgage-backed securities. This also adds to the supply of bonds. Finally, global economic growth in recent months has been the strongest since the financial crisis, which could increase inflationary pressures. The only potential factor that was new this week was that oil prices reached the highest level since 2014, which also could increase the outlook for future inflation.  

Since consumer spending accounts for roughly 70% of economic activity, investors keep a close eye on the retail sales data. Following strong readings during the fall, retail sales posted unexpected declines for three straight months. However, the data for March released on Monday showed that they increased a healthy 0.6% from February, breaking the unwelcome trend.

This week's report on housing starts was not as encouraging as the retail sales data. On the surface, overall home construction in March looked good with a stronger than expected increase from February, but this was completely due to strength in the multi-family segment. Single-family housing starts fell 4% from February, and permits to build single-family homes dropped even more to the lowest level since September 2017. This data tends to be volatile from month to month, however. 

Looking ahead, Existing Home Sales will be released on Monday and New Home Sales on Tuesday. Durable Orders will come out on Thursday. The first reading for first quarter gross domestic product (GDP), the broadest measure of economic activity, will be released on Friday. In addition, the next European Central Bank (ECB) meeting will take place on Thursday, and it could influence U.S. mortgage rates. 


Weekly Change:

Mortgage Rates rose 0.07

DOW fell 50

NASDAQ rose 50

However, if you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit: