By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC ***
Mortgage rates declined sharply while Federal Reserve officials remain firm with their “patient policy.” The trade war between the U.S. and China could actually be helping the American housing market boom.
Tensions have made investors rush to the relatively safe haven of the bond market, causing the yield on the U.S. 10-year Treasury to plummet – mortgage rates loosely followed that yield.
The average rate on the 30-year, fixed-rate mortgage fell four basis points midweek, according to Mortgage News Daily, and fell even more sharply at the end of the week.
Home prices are still high, and those looking to purchase a house are sensitive to rate moves. Buyers have to make sure their monthly budget covers a house payment, and just half a percentage can mean $100 a month more or less on a $300,000 mortgage.
In November 2018, the average rate spiked over 5 percent with the expectation that the Federal Reserve would continue hiking rates. Currently, the most qualified buyers could see mortgage rate quotes under 4 percent. These are the lowest mortgage rates in over a year.
Minutes from the May 1-2 Federal Open Market Committee meeting say “members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time.”
During the meeting, the committee had a generally optimistic tone despite observing a patient approach to determining future rate adjustments “especially in an environment of moderate economic growth and muted inflation pressures, even if global economic and financial conditions continued to improve.”
The minutes also show a Fed that feels comfortable with a policy as well as the current rate of growth.
The Fed initially indicated two likely rate hikes in 2019, but then shifted away from their stance. The Fed forecast now shows no rate moves to come “for some time” even if the economy improves.
- 4 Jun, 2019
- Josh Smith