“OML” Mortgage Market Update

In a week packed with big economic news, investors feared that the trend toward higher mortgage rates seen in January would continue. The risk that the Fed might signal a scaling back of its MBS purchases concerned investors. In the end, though, a neutral Fed statement and an unexpected increase in the Unemployment Rate allowed mortgage rates to reverse early increases and end the week with little change.

Wednesday’s Fed statement was very similar to the statement issued after its December meeting. Concerning its MBS purchase program, the intention stayed the same, meaning that the Fed will continue buying MBS until the Unemployment Rate drops to 6.5%, as long as inflation doesn’t increase too much before then. The Fed is the largest buyer of MBS and its demand helps keep rates low. The Fed statement reduced concerns that the MBS purchase program might be cut sooner than previously expected.

Against a consensus forecast of 180K, the economy added 157K jobs in January. The figures from the prior two months were revised significantly higher, raising the 3-month average above expectations. The Unemployment Rate climbed to 7.9%, though, above the consensus for a decline to 7.7%. The increase took place because the labor force grew more quickly than the number of jobs. Bottom line, job growth was a little stronger than expected overall. But with the Fed specifically targeting the Unemployment Rate to determine the duration of its bond-buying program, the increase to 7.9% was favorable for mortgage rates.

After an incredibly full week of economic news, this week will be the opposite. Factory Orders will be released on Monday. ISM Services will come out on Tuesday. Productivity is scheduled for Thursday, and the Trade Balance will be released on Friday. None of these reports are generally major market moving events.

Give Donna, Pete, Cody or Drew a call today to discuss rates & get your buyer “Pre-Approved”.
You can reach any/all of us at 918-592-6000.
Thank You For Your Partnership.
Make It A Great Week!

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s