Mortgage Rates on the Back Foot

Bob Mason
mortgage rates

Things are looking up for U.S home buyers and homeowners and the prospective home buyers. Those may have Trump to thank for the continued decline in U.S mortgage rates and the perspective of further declines through the early part of next year.

The 30-year fixed rate averaged out at 3.90% last week, according to Freddie Mac’s Primary Mortgage Market Survey (PMMS). That’s down from the previous week’s 3.92% and 15-year mortgage rates slipped from 3.32% to 3.30%.

The falling rates come in spite of rising expectations of the U.S administration passing through the Republican tax reform bill, with incoming FED Chair Jerome Powell’s comments in front of Congress on monetary policy leaving yields on the lower side through the first half of the week.

It’s somewhat hard to imagine that rates will stay at current levels, however, when considering the likely impact of tax reforms on yields over the near-term. With 30-year mortgage rates correlated to 10-year Treasury yields, special Counsel Mueller’s continued progress in investigating Trump’s election campaign is one factor that could pin back yields, with immediate concerns over the possible closing down of the government should funds not be made available by 8th December also another factor. These are all near-term factors however that will likely fall away before the end of the year. Tax reforms, on the other hand, are likely to have an influence and we could see mortgage rate forecasts for next year soon be revised upwards.

The 3rd quarter GDP out of the U.S was revised upwards in the 3rd estimate figures and Freddie Mac’s PMMS was completed before the GDP numbers were released.

For now, the upward effect on mortgage rates from tax reforms and better than expected GDP numbers are likely to be offset by the outlook on inflation that remains well below the FED’s 2% objective. That means that, while tax reforms may well give a boost to the economy until inflation takes a run at the FED’s objective, the FED’s current rate path is unlikely to change too much for next year.

What an outcome it could be for homeowners and those looking to refinance or buy property in the New Year. The combined effect of an increase in disposable income and falling mortgage rates can only be a good thing for those in the market and for the U.S economy. Labour market conditions are tight, taxes are likely to be on the decline and mortgage rates are on the back foot.

It won’t last for long, with a likely increase in consumer spending, not to mention pickup in wage growth, likely to spur inflation and yields, but the window of opportunity is there and priority one is to lock in the best possible rate before it all starts heading north.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US