Entering the 4th week of October the biggest news in the mortgage sector will come from the FOMC (Federal Open Market Committee) meeting starting Tuesday, October 27th and ending Wednesday, October 28th.
The FOMC sets monetary policy for the Federal Reserve, specifically the Fed Discount Rate. Currently at .250%, that is the rate institutional commercial banks are charged to borrow funds. The rate has held steady for most of the year and even though most financial experts believe an increase is imminent, there has been some dissent among members there is enough justification for an increase.
Even if an increase would happen, and that is doubtful, those in the mortgage sector can be fairly confident the impact would be minimal for the short term.
Federal Reserve FOMC Meetings
The timing of Tuesday’s meeting coincently occurs prior to the monthly employment report. It is that data which is a critical factor in deciding for an increase in the rate based on Chairman Yellen’s past comments.
“To be clear, our decision will not hinge on any particular data release or on day-to-day movements in financial markets. Instead, the decision will depend on a wide range of economic and financial indicators and our assessment of their cumulative implications for actual and expected progress toward our objectives.”
Mortgage Applications to decrease
In line with the discussion of whether the Fed will increase rates or not, last week the Mortgage Bankers Association of America reported those applying for mortgages in 2016 will decrease to $1.32 trillion. Interestingly that population will see those using a mortgage to purchase their property jump ten percent.
“We are projecting that home purchase originations will increase in 2016 as the US housing market continues on its path towards more typical levels of turnover based on steadily rising demand and improvements in the supply of homes for sale and under construction. Despite bumps in the road from energy and export sectors, the job market is near full employment, with other measures of employment under-utilization continuing to improve.” Michael Fratantoni, MBA’s Chief Economist and Senior Vice President for Research and Industry Technology.
Mortgage rates are expected to hover in their current average range of 3.80% They were down this past Thursday, but as consumers are gearing up for the holiday season there is not much news which projects any major deviations.
Overall, based on news this should be a pretty calm week for those tracking mortgage movement.