Mortgage rates are unchanged from the beginning of the week.
There is a lot of economic news to cover this morning. First off, the Fed’s monetary policy statement released yesterday offered little clarity on when the Fed plans to start raising short-term interest rates. They have scheduled meetings in September, October, and December and at this point the markets believe October is the most likely scenario for rates to begin increasing. As I wrote on Monday a Fed rate hike could actually help mortgage rates move lower in the near term.
Next up, The Commerce Department’s first reading of Q2 gross domestic product (GDP) showed the US economy grew at a 2.3% annualized clip from March-June. This was slightly below expectations but still a solid number. Q1 GDP, which had previously been reported at -.2%, was revised higher to +.6%.
With regard to inflation, the core Personal Consumption Expenditure (PCE) price index was up 1.8% year-over-year which is much higher than +1.0% reported last month. As I’ve been reporting on ‘rate update’ a lack of inflation has been the missing piece for the Fed to justify rate increases. With the PCE increasing closer to their target of 2% the door has been opened for rate increases later this year.
The other piece of the puzzle for the Fed is jobs. Earlier today weekly jobless claims were reported at 267,000 which is a very strong number. If you’ll remember back to last week this same report showed the strongest results in 42 years. The labor market continues to show strength.
Despite all this good economic news mortgage rates remain very attractive relative to the past few weeks. I suggest borrowers take advantage and lock in.
Current Outlook: locking bias