Mortgage rates are better today as compared to Monday. There is a lot to cover today.
First, the highly anticipated Fed meeting concluded yesterday. As expected the Fed did not make any changes to short-term interest rates. However, the Fed did signal to the markets that it is probable that they will hike at their December meeting. A look at the “dot chart”, which is released following every meeting shows that 10 out of 17 members are anticipating one more .25% rate hike in 2016 (presumably at the December meeting).
Given that the Fed is “likely” to hike rates in December do prospective borrowers need to hurry and lock in a rate? The media and unnamed mortgage companies will use this to stir up fear but the reality is a Fed rate hike will not in and of itself push home loan rates higher. History may not repeat itself but the last time the Fed hiked rates in December of 2015 mortgage rates fell by .375% in the following 8 weeks.
The National Association of Realtors released monthly numbers for existing home sales. The number of home sales declined in August sparking concerns in the media. Let’s not get ahead of ourselves. Existing home sales in July were exceptionally high so a decline from those levels is not surprising. Furthermore, as compared to August of 2015 there were .8% more home sales. Inventory remains tight nationwide which is supportive of pricing.
Lastly, weekly jobless claims fell this week which is a good sign for the labor market. The numbers released today represent the sample week for the next Bureau of Labor Statistics jobs report due out on Friday, Oct. 7th.
Mortgage rates are trending in a favorable direction so I will recommend floating into the weekend.
Current Outlook: floating