Rates Fall For the First Time in Over a Week
Intraday movements in the bond market and mortgage rates are closely followed. Mortgage rates rarely stay the same for more than five business days without decreasing at least once—even if only slightly. Thankfully, we finally saw some movement in rates declining which put an end to that trend (rates hadn’t improved since Monday).
Bonds initially reacted negatively to today’s inflation news (spoiler alert: it’s still high), but they eventually recovered and settled down. The 30-year Treasury bond auction that went better than expected added to the positive response in the bond market and the slight decline of interest rates.
Fed Could Begin ‘Gradual Tapering Process’ by Mid-November
According to the minutes from the central bank’s September meeting released Wednesday, Federal Reserve officials could begin lowering what seems like the never-ending interest rate assistance they’ve been providing to the economy as early as mid-November. Moreover, members believe the Fed is near to completing its economic goals and will soon begin normalizing policy by slowing the pace of its monthly asset purchases.
The Fed would gradually cut the $120 billion in monthly bond purchases, a practice known as tapering. According to the minutes, the central bank would likely begin by eliminating $10 billion in Treasury bonds and $5 billion in mortgage-backed securities each month. The Fed is now buying Treasurys worth at least $80 billion and MBS worth at least $40 billion. Should there be no setbacks, the target date to end the purchases would be mid-2022.
Affordability Improved in August Despite Surging Prices
As shown in a new survey from the National Association of Realtors (NAR), home affordability in the United States increased for the second month in a row in August. The National Association of Realtors’ Housing Affordability Index increased from 150.6 in July to 151.3 in August. However, it was still down from 165.8 in July.
The most affordable region was the Midwest, with an index value of 196.8 (median family income of $86,614 with the qualifying income of $44,016). The least affordable region remained the West, where the index was 114.9 (median family income of $94,372 and the qualifying income of $82,128).
Next week’s potential market-moving reports are:
- Monday, October 18th – National Association of Home Builders Index
- Tuesday, October 19th – Housing Starts (SAAR)
- Wednesday, October 20th – No Report
- Thursday, October 21st – Initial Jobless Claims, Continuing Jobless Claims, Existing Home Sales
- Friday, October 22nd – No Report
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.