Home Loan Rates

Mortgage rates are mostly unchanged to slightly worse compared to last week.  The catalyst which pushed rates higher last week was an announcement pertaining to US-China trade relations.

Phase One

On Thursday, it was announced that the US and China had agreed to a “phase one” trade agreement.  On the announcement the US stock market rallied and mortgage rates increased.  However, after analysts had a chance to read the details of the agreement stocks and rates recovered slightly because the initial plan is less substantial than the markets had thought.

The Fed

Last week the Federal Reserve Open Market Committee met and elected to make no changes to short-term interest rates.  Although the Fed does not directly control mortgage rates their comments can, at times, impact their direction.

The markets currently are not expecting any cuts or hikes to the Federal Funds rate in 2020.

Home Construction

Data released earlier today shows strength for home building in 2020.  According to the Commerce Department housing starts were up 8.5% in October compared to a year earlier.  Furthermore, building permits hit the highest level in over 12 years.

More housing supply should help soften home price appreciation in the near-term.

The week ahead

This week’s economic calendar is relatively light.  I will be watching for existing home sales (Thursday), leading economic indicators (Thursday), and the Personal Consumption Expenditure Price Index (Friday).

From a technical perspective there is more room for mortgage rates to worsen than there is for them to improve.  I will maintain a locking bias this week.

Current Outlook: Locking bias