Posted On December 13, 2019
As expected, the Federal Open Market Committee (FOMC) voted to leave the benchmark interest rate unchanged at its last meeting of 2019. Mortgage rates reacted by not moving significantly. New purchase mortgage application submissions fell slightly, and refinance application submissions climbed. The consumer price index increased.
The Mortgage Bankers Association (MBA) weekly mortgage application survey returned mixed results again for the week ending 12/6. With mortgage rates still historically low, refinance mortgage application submissions jumped 9.0% while new purchase application submissions slipped 0.4% for a composite increase of 3.8%. Specifically, there was an increase in FHA loan applications. Joel Kan, MBA’s associate vice president of economic and industry forecasting, commented, “the decrease in FHA rates led to a 27% jump in refinance applications for those loans, and their share of refinance activity – at 14% - was the highest since 2016.”
The consumer price index increased 0.3% month-over-month and 2.1% year-over-year in October. Excluding more volatile food and energy costs, the index was up 0.2% and 2.3% year-over-year. The cost of rent and medical care increased along with food, clothing, education, and vehicle costs.
The FOMC closed out the year with one more semiannual monetary policy meeting where they left the benchmark interest rate unchanged. Based on the Fed’s dot plot, they are signaling to continue holding on rate hikes in 2020 and maybe raising rates one time in 2021. These projections are subject to change based on greater economic conditions.
With no rate hikes expected next year, mortgage rates will likely remain historically low. Many homeowners are taking advantage of the low rates with a refinance. A refinance is an opportunity to secure a lower mortgage rate or in some cases get cash out to reinvest in your home or fund other expenses. If you have any questions about a purchase or refinance, please let me know.