Wednesday, September 5, 2012

QE 3 Are you ready?


QE3 Coming Next Week?

Mortgage pricing worsened Tuesday as investors prepped for this week's European Central Bank meeting. The ECB meets Thursday, adjourning at 7:00 AM ET. In other words, by the time the U.S. mortgage market opens tomorrow morning, rates will already be changed.
Wall Street is also jockeying ahead of the Federal Open Market Committee's 2-day meeting scheduled for September 12-13, 2012. There are growing expectations for the Federal Reserve to introduce a new round of monetary stimulus, likely in the form of quantitative easing. This would be the Fed's third round of quantitative easing since November 2008, which is why the not-yet-launched program is dubbed QE3.
QE3, if launched, is expected lower mortgage rates in the near-term.

Home Prices Rise 3.8%; Construction Spending Falls

Other news affecting mortgage rates Tuesday included a weak ISM report and a drop in construction spending.
The Institute for Supply Management indicated that its manufacturing index dropped to 49.6. Readings under 50 indicate that more firms are contracting than growing, a sign of economic slowdown. Construction spending fell 0.9 percent, in part, because of a pick-up in home sales nationwide. Homeowners do less building when they're buying.
As a testament to the housing market's strength, CoreLogic reported home prices up 3.8% in the 12-month period ending in July.
On a month-to-month basis, home prices rose 1.3 percent and August is forecasted to show a further increase of six-tenths of one percent. This would push the annual home price increase to 4.6 percent -- a steady, consistent figure.

Mortgage Rates Ready To Move

Wednesday, with little new data set for release, mortgage rates will move with momentum. Rhetoric from the ECB ahead of Thursday meeting will influence whether mortgage rates rise or fall, but trading should be relatively calm. Markets are also bracing for Friday's U.S. jobs report. That, too, could swing mortgage rates today.