Quantitative Easing Crosses the Pond
Taking a page from the US Federal Reserve’s book, the European Central Bank (ECB) announced that starting in March, it will purchase 60 billion euros ($69 billion) per month of public and private bonds to help drive money cost down and improve the European economies. The bond buying will continue at least through September 2016. Most of the purchases are expected to be sovereign bonds of Eurozone countries. The US bond/mortgage market had been anticipating this move, and mortgage rates reacted very little to the news. This action by the ECB should however continue to foster a global-wide climate of low interest rates for at least the intermediate term.
Back on the home front, the housing data for December released this week showed that we head into 2015 at a faster pace than at this time last year. Existing Home Sales are 4% higher than one year ago. Single-family Housing Starts are at their best level since March 2008. Building Permits, a leading indicator of future activity, also are higher than one year ago. Headwinds for housing market activity in 2015 include a low inventory of existing homes for sale and higher home prices. Median existing home prices rose in 2014 to the highest level since 2007. Mortgage rates are certainly not an issue, as they are now lower than at any time last year.
Week Ahead: Greek elections took place on January 25 and may indicate an increased level of support for Greece to leave the European Union. In the US, the next Fed meeting will be on Wednesday. Investors will be looking for hints about the expected timeline for fed funds rate hikes. Durable Orders, an important indicator of economic growth, will be released on Tuesday. The first reading for fourth quarter GDP, the broadest measure of economic activity, will come out on Friday. New Home Sales and Pending Home Sales will round out the busy schedule.
Today’s rate snapshot: 30-day lock rates as of 1/26/2015 9:20AM:
30-year Fixed (conforming): 3.625% (3.75%APR*)
15-year fixed (conforming): 2.99% (3.125% APR*)
7-year ARM (conforming) 3.125% (3.25% APR*)
30-year Fixed (jumbo) 4.125% (4.25% APR**)
*Based on 70% LTV, primary residence, rate and term refinance and purchase, 175k minimum loan size, 30-day lock. Rates subject to change at any time based on bond market pricing fluctuations. **Minimum loan size for a jumbo loan is $418,000. This information is intended for professional reference only, and not intended for consumer use. Additional qualifications and disclosures apply.
Have a great day!