Shelter Six:  The Fed Bumps Up Short-Term Rates

March 26, 2018 by · Leave a Comment 

1. As expected, the Federal Reserve bumped up short-term rates .25% last week.

2. .New Fed Chair Jerome Powell’s first press conference left investors divided about whether there will be three or four total rate hikes this year.

3. Also last week, the Trump administration announced about $50B in new tariffs on Chinese imports.  Although less than expected, fears of Chinese retaliation still remain.

4. A trade war with China would be bad for the economy and stocks, but it’s impact on mortgage rates is hard to predict.

5. February sales of previously owned homes increased 3% from January and would have been even higher if not for the severe weather around the country.

6. Inventory seems to be finally heading in the right direction and was up 5% in February to a 3.4 month supply, but 8% lower than a year ago.

Rate Update

After a major surge in January and February, mortgage rates have managed to hold remarkably steady in March.  Even with the rate and tariff announcements last week, mortgage rates remained flat despite large stock market losses.

This Week

Pending Home Sales will be released on Wednesday and the Core PCE Price Index on Thursday.  Mortgage markets will close early on Thursday and all day on Good Friday.