End Of The Year Boost

Dated: 01/06/2017

Views: 884

Over the past week, end-of-year portfolio adjustments appeared to have the most influence on mortgage rates. The economic data and the Fed minutes caused little reaction. Mortgage rates ended the week a little lower.

Investors made final adjustments to their 2016 portfolios by buying bonds and selling stocks. Since the presidential election, stock prices have moved higher. Added demand for stocks and higher share prices resulted in a larger weighting in stocks in many portfolios. For year end, however, some investors needed to rebalance their mix of investments to include more bonds, including mortgage-backed securities. The added demand for bonds was good for mortgage rates.

The minutes from the December 14 Fed meeting released on Wednesday had little impact on mortgage rates. The minutes did provide some understanding of how Fed officials view the economic effects of expected policy changes under the Trump administration. According to Fed officials, expansionary fiscal policies are expected to increase economic activity and inflation levels. But Fed officials felt that it is too soon to predict the impact the policies may have on monetary policy. Along with everyone else, the Fed will have to wait and see what happens. 

The ISM national manufacturing index released on Tuesday contained good news for the economy, but bad news for mortgage rates. The overall index rose to the highest level since December 2014. In addition, the prices paid component surged in December, hinting at future inflationary pressures, which would be negative for bonds.

Blog author image

David Sarnowski

David is a seasoned real estate professional, specializing in residential sales, rentals and investment properties. David is a 15 year resident of the New Jersey Gold Coast, with the local knowledge n....

Want to Advertise on this Site?

Latest Blog Posts

Questions And Answers Regarding Escrow Accounts

Questions and Answers Regarding Escrow Accounts Whether you are purchasing a new home or you are considering applying to refinance your home, chances are the lender will require an escrow account.

Read More

Whats Ahead For Mortgage Rates This Week February 20th 2018

What’s Ahead For Mortgage Rates This Week – February 20th, 2018 Last week’s weeks economic releases included readings on the NAHB Housing Market Index, housing starts and building permits

Read More

Why Should One Consider Refinancing Their Mortgage Now

Why Should One Consider Refinancing Their Mortgage Now? Refinancing a mortgage is a golden opportunity to lock in today’s low interest rate for the next 15 or 30 years. While interest rates now

Read More