Forex »

US Mortgage Applications Fall Substantially

James Boston
Share on StockTwits
Published on
www.finances.com

According to the latest Mortgage Bankers Association release the number of Mortgage Applications dropped substantially in the last week in August. Data for the week ended 1st September is showing a fall off of -7.2% in the number of applications compared to a slight rise of 0.2% the previous week. This larger than normal change in the figure can largely be explained by the traditional holiday period of late August leading into the Labor day holiday that signals the end of the summer vacation period. Analysts, who are well aware of the need for a holiday adjustment, predicted a much smaller drop in the Application rate, this weekly figure is traditionally volatile but the trend over the next few weeks will be watched closely for any signs of a more fundamental reason for the magnitude of the swing. The Mortgage Bankers Association also updated the 30 year Mortgage Rate to 4.27% from 4.29% the previous week.

Although monitored by the Federal Reserve policy makers, the US housing market, particularly in it’s current stable condition does not hold much potential for influencing monetary policy in the short to medium term. Instead the Fed is focused on the Labor markets, it’s Chair, Janet Yellen, has been noted as having added additional Labor market indicators to the watch list as concern over the changing structure of the employment market weighs on policy decisions.

The Fed is once again preparing to alter it’s grounds for forward guidance with respect to interest rate decisions. As the quantitative easing program comes to an end next month the current guidance stands that rates will be addressed no sooner than six months after the asset purchase program ends. The Fed however is rumoured to be considering moving away from this guidance and returning to it’s initial stance that an alignment of stable inflation and full employment would be required before monetary tightening would be considered.

Share on StockTwits