Central bankers acknowledged the slowdown in global economic growth this week, which was positive for mortgage rates.
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As expected, the Fed made no changes in the federal funds rate as they expressed less confidence that inflation was to rise on their expected path. Inflation is being held down partly due to the drop in oil prices, and FOMC policy makers expect inflation to remain low in the near term. The Fed is much more confident on the job front, calling improvement “strong” and “continuing”.
One of the biggest U.S. economic reports released this week, Gross Domestic Product (GDP), coincided with predictions of slowing inflation. Fourth quarter GDP increased at a 0.7% annualized rate, following the 3rd quarter’s 2.0% annualized rate. Year-over-year GDP has risen at an annualized rate of 2.4%, matching levels last seen in 2014.
Last week in the economy:
- Mortgage rates (the national average) declined 0.08% (8 basis points).
- The purchase index of MBA Mortgage Applications jumped 5% in the January 22 week with refinancing applications up 11 percent, driven by low mortgage rates.
- Initial jobless claims having risen to 6-month highs and raising doubts surrounding the strength of the January labor market fell back a noteworthy 16,000 in the January 23 week to a lower-than-expected 278,000.
- According FHFA data, home prices were up a 0.5 percent in November. Year-over-year is plus 5.9 percent.
- Consumer Confidence is solid at 98.1 for January, despite lower consumer spending.
- The Consumer Comfort Index began January below the 44-mark, but despite major market volatility, the index has inched its way to 44.6 for the January 24 week.
- December Pending Home Sales increased 0.1% after a downward revised 1.1% decline in November. Despite the small increase, the housing sector has had positive reports, including sales gains and home price appreciation.
What's on the economic calendar for the week of February 1, 2016:
Monday: Construction Spending
Wednesday: MBA Mortgage Applications, ADP Employment Report, Gallup U.S. Job Creation Index
Thursday: Jobless Claims
Friday: Employment Situation
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