Mortgage Rates End Week at Best Levels

By MATTHEW GRAHAM

Mortgage Rates End Week at Best Levels
Decrease Font SizeTextIncrease Font Size Jul 14 2017, 4:03PM
Mortgage rates are experiencing increased volatility at the end of this week, which was to-be-expected given the calendar of events and economic data. Fortunately, the volatility worked in favor of lower rates this morning after Retail Sales and a key consumer inflation report both came in lower than expected. In general, weaker economic data coincides with rates moving lower. Investors are particularly interested in inflation data at the moment as it seems to be the Fed’s biggest hang-up when it comes to removing “accommodation” (a broad term that refers to the level of the Fed Funds Rate and the Fed’s bond buying policies).

A removal of accommodation could take the form of a Fed rate hike or a decrease in the amount of bonds the Fed is currently buying as a part of its reinvestment policy. The Fed has increasingly signaled that it will soon announce such a reduction, and they’ve already laid out the framework to do so. Lackluster inflation data means the Fed is less likely to flip the switch on those plans in an upcoming meeting. And the longer it looks like the Fed will continue buying the amount of bonds it’s currently buying, the better rates will do, all other things being equal.

All other things got less and less equal as the day continued. The morning’s rate sheets were the best of the week, but traders didn’t want to be quite so exposed heading into the weekend. This can be thought of as a simple packing-up of the picnic basket for this particular day in the sun. There may or may not be another picnic next week, but traders didn’t want to leave their supplies out all weekend, just in case next week’s weather isn’t as conducive.

Bottom line: today’s rates were indeed the best of the week on average, but many lenders adjusted back toward Wednesday’s levels by the end of the day.