Mortgage applications drop; Fed speak gets interesting
Posted August 8, 2012
Mortgage Applications fell 1.8% for the week ending August 3rd according to the latest report from the Mortgage Bankers Association Application Index. Higher mortgage rates were the root cause of the drop, with refinances leading the way down by 1.8%. Purchases dropped by 1.4% for the week as well.
Fed Speak is getting interesting, as opposing Fed mindsets have risen publicly to the surface this week. Dallas Fed President Richard Fisher indicating Wednesday that the Fed has done enough with stimulus, and now it’s time for the markets to right themselves. “We’ve provided the gas, and the gas tank is full” said Fisher on Wednesday. Boston Fed Bank President Eric Rosengren (who isn’t one of the voting Fed leaders), indicating that we should have all hands on deck with a significant stimulus package in the very near future. He suggested that the Fed should be buying Treasuries and Mortgage Backed Securities and that as the Fed, "You continue to do it until you have documented evidence that you're getting growth in income and the unemployment rate consistent with your economic goals." These diametrically opposed viewpoints will provide some interesting discussion fodder as we approach the Fed’s next meeting in September.
Thursday brings us weekly jobless claims and trade data. It will be interesting to see where jobless claims go after the July Jobs report from last Friday.
Mortgage Rates have now risen to a one month high, while the 10 Year Treasury Yield is hovering around 1.65%, which is a level much above what has been the 40 day average for yields.