Mortgage Rates continue to edge lower, Housing is off to a good start in 2017, FOMC members expect economy to pick up momentum in Q2
May 25, 2017
Mortgage rates continued to edge lower in the latest week as Bond prices hit six-month highs due to the political turmoil out of Washington in the past week. Freddie mac reports that the 30-year fixed conforming mortgage rate fell to 3.95% this week with 0.5 in points and fees added on top of the rate. It was the lowest rate since the week of November 17, 2016. At the end of last year, many predicted that mortgage rates would average 4.50% in 2017, but they have been in the range of 4.12% so far this year.
Freddie Mac released its Economic & Housing Research Outlook for May reporting that despite weak economic growth, housing got off to a good start in 2017 due in part to the low mortgage rate environment. Freddie Mac says that the U.S. housing market is now on track to eclipse last year as the best in over a decade. Freddie went on to say that increased inflation and higher short term rates will push up long-term rates, including mortgage rates. However, the increase will be measured with the 30-year fixed rate averaging 4.3% in the fourth quarter.
The minutes from the May 3 Federal Open Market Committee (FOMC) meeting were released yesterday and it had a bit of good news for both Stocks and Bonds. The minutes showed that “nearly all” FOMC participants agreed that the unwinding of the Fed’s balance sheet should be controlled by a series of gradually increasing caps, or limits – good news for Bonds. In addition, members expect the economy to pick up momentum in the second quarter – good news for Stocks.
