End Of The Year Boost

Dated: 01/06/2017

Views: 985

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....

Latest Blog Posts

Buying A Home Take Stock Of These Things

What are some of the most important factors that buyers take into consideration when looking for a new home? There are the obvious things like price, square footage, location and lot size. Those

Read More

Millennial Home Buyers What You Need To Know

In the past, you’ve likely read about how the Millennial generation is opting to rent rather than buy property. While this still holds true for many Millennials, the fact is that a growing number

Read More

5 Upgrades That Add BIG Value To Your Condo

Following my previous post, "10 Things To Consider Before Renovating Your Condo" now you should have a better idea of who you're renovating for, what the rules are, and how to get the most out of

Read More

10 Things To Consider Before Renovating Your Condo

I read two great articles recently about the best upgrades and renovations to consider when you want to add value to your condo. This is great advice if you're looking to sell your home soon or just

Read More