Mortgage Rate Update August 22, 2016

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Housekeeping: ‘Rate Update’ will be on vacation for the remainder of August.  Look for the next ‘rate update’ to take place after Labor Day.

Mortgage rates are unchanged from last Thursday.

This week’s economic calendar is relatively light which is fitting given that we are in the “dog days of summer”.  What will be closely watched is the Jackson Hole Symposium.

Every year since 1978 the Federal Reserve Bank of Kansas City has hosted an annual economic policy symposium where central bankers from around the world fly in to focus on various economic topics.  Sounds fun, right?

The most anticipated speech will come Friday when Fed Chairwoman Janet Yellen will speak.  As I wrote about on Thursday the Fed is currently at odds as to whether to hike short-term interest rates now or later.

Scenic Jackson Hole, Wyoming will play host to central bankers from around the globe this week. Fed Chairwoman Janet Yellen is slated to deliver a much anticipated speech this Friday.
Scenic Jackson Hole, Wyoming will play host to central bankers from around the globe this week. Fed Chairwoman Janet Yellen is slated to deliver a much anticipated speech this Friday.

The US economy has shown strong job growth each of the past two months.  Furthermore, inflationary pressure has been picking up especially looking at the Consumer Price Index (CPI) which takes into account housing costs.  One problem with the Fed’s preferred gauge of inflation, called the PCE, is that it does not include housing in its basket of goods.

If Yellen sounds “hawkish” in her comments this Friday it will be interesting to see how the markets react.  Intuitively you might think mortgage rates will suffer if she hints at a rate hike.  However, the Fed does not directly control mortgage rates.  I wouldn’t be surprised to see US stocks falter which could help mortgage rates move modestly lower.

Current Outlook: floating