Central bank meetings were the main focus last week. Investors viewed the U.S. Fed meeting as positive for mortgage rates, while the European Central Bank meeting provided no surprises and had little impact. However, stronger than expected retail sales data offset the reaction to the Fed, and mortgage rates ended the week with little change.
Heading into Wednesday’s Fed meeting, the 0.2500% rate increase was widely expected. Investors’ main interest was in guidance from the Fed for the pace of future rate hikes. The Fed’s forecast revealed a slightly faster pace of rate hikes in coming years.
The biggest economic report this contained a major surprise to the upside. Retail Sales in November jumped 1.0% from October, which was well above the expected levels. Aside from the September results which were boosted by hurricane-related spending, this was by far the largest monthly increase since January. Since stronger economic growth raises the outlook for future inflation, the retail sales data was negative for mortgage rates.
Looking ahead, political news on tax reform or government funding could influence mortgage rates this week. A vote on the tax bill is expected, and the extension to the government funding bill expires on December 22nd. The major economic data will focus on housing and inflation. Housing Starts will be released on Tuesday and Existing Home Sales on Wednesday.
Please let me know if you have any questions in regards to this, or if there is anything we can do for you and your valued clients.
Thank you for your continued support, have a productive week.
SVP, Regional Manager
THE CRAWFORD TEAM
V.I.P. Mortgage, Inc.