Thursday's European Central Bank (ECB) meeting was viewed as negative for U.S. mortgage rates. The economic data released this week had little impact. As a result, mortgage rates ended the week a little higher.
Some investors were disappointed by Thursday's decision by the ECB to make no change in monetary policy. To help ease the impact of the June 23 Brexit vote, some wanted to see the ECB provide additional stimulus. Looser monetary policy from global central banks with bond purchase programs has been viewed as positive for mortgage rates in recent years. The reaction on Thursday morning to the lack of additional stimulus was an increase in mortgage rates. Comments from ECB officials left the door open for looser policy at the next meeting in September, however, and the impact of this meeting was small.
June was another good month for the housing market. Sales of existing homes rose in June for the fourth month in a row to an annualized rate of 5.6 million units, which was the best level since February 2007. This was achieved despite a very low supply of homes available for sale. There was just a 4.6-month supply in June. A healthy balance between buyers and sellers is considered to be a little over a 6.0-month supply.
Home builders are certainly aware of the lack of supply as they have ramped up construction. The Commerce Department reported that there were more houses under construction at the end of June than at any time in the last eight years.
Looking ahead, the next U.S. Fed meeting will take place on July 27. No change in rates is expected, but the statement from the Fed could have a significant impact on mortgage rates. Before the Fed meeting, the new home sales data will come out on Tuesday. The pending homes sales data and the report on durable orders will be released on Wednesday. The first reading for second quarter Gross Domestic Product (GDP), the broadest measure of economic growth, will come out on Friday.
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