When the FOMC policy meeting concludes this Wednesday (July 31), financial markets will look for any news about the future of quantitative easing, the Fed’s bond-buying economic stimulus program. Even a vague mutter about “tapering” could cause another bond sell-off and more significant mortgage rate movement (for the worse).
If the FOMC gives any kind of strong indication that it will continue with QE as currently constructed through 2013 and beyond, we would expect rates to drop.
After the last meeting, Federal Reserve Chairman Ben Bernanke said that the FOMC would consider reducing QE when the economy showed enough improvement. Even such a bland statement caused rampant speculation that QE would be wound down by the end of 2013 (read more here).
Since the late-June, early-July fireworks, markets have calmed. Mortgage rates have remained at a higher level, though they eased slightly lower during the previous three weeks.
Also this week, second quarter GDP data, July employment data, and the S&P Case-Shiller home price index will be released. Manufacturing and factory data comes out as well.
The busy week started with the National Association of Realty showing that pending home sales fell slightly from May to June. The index fell 0.4% on the month, though this was from a six-year high Rising rates may have contributed to the fall, as has constrained inventory.
Mortgage rates have remained mostly unchanged from Friday. You can see the most recent update here.
We will be tracking the big data releases this week and updating mortgage rates as they move. Check in with our mortgage rate tracker later in the week here.