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Mortgage rates edge lower this week, Stocks higher

July 27, 2017

Mortgage rates edged lower this week, declining for the second straight week. The lower rates came after the Fed left its benchmark interest rate on hold. The news on rate sparked a rally in both the Stock and Bond markets, while yields pushed lower. Freddie Mac reported that the 30-year fixed rate mortgage fell to 3.92% from 3.96% with 0.5 in points and fees. Last year this time the rate was 3.42%.

The Fed left the Fed Funds Rate on hold yesterday and said that it will begin unwinding its balance sheet “relatively soon” provided the economy evolves broadly as anticipated. Low inflation levels could throw some doubt in Fed assumptions that the unwinding of its balance sheet will begin in September with a December rate hike.The Core PCE, the Fed’s favorite gauge of inflation is not just under 2%, but it has been steadily declining. It was 1.8% in January and fell to 1.4% in June. Low inflation will keep the Fed on hold with rates and could push back any thoughts of unwinding its balance sheet.

Stocks are higher once again as the Dow, NASDAQ and S&P trade at record highs. After the bell, Amazon will report earnings; this comes after blowout earnings from social media giant Facebook after the close yesterday. Today is the busiest day of the season for earnings. Of the companies in the S&P 500 that have reported their numbers, 78% have beat on earnings.