Refi Boom in Full Swing. What Will Fed Do Now?

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Mortgage and Lending with The Federal Savings Bank/Lending in 50 states NMLS # 109616

After last week's holiday-shortened week, things will heat up in the next 5 days while volatility may also be on the rise for the US capital markets. The week will feature Fed Chair Powell as he delivers his semi-annual testimony on the state of the US economy in front of Congress on Wednesday and Thursday. Powell's speech comes ahead of the July 30-31 Fed meeting and his words could be market moving. The Treasury will sell a total of $78 billion in Treasury Notes and Bonds this week beginning with tomorrow's $24B 3-year offering. Inflation readings from the Producer and Consumer Price Index will also be released during the week.

Low mortgage rates could generate an uptick in homeowners refinancing their current mortgages in the months ahead. Black Knight, a leading provider of integrated software for housing industry, reports that 8.2 million homeowners with mortgages could now benefit from a refinance, including 35% of those who took out their loans last year. In addition, as of June 27, there were 1.5 million potential refinance candidates in the 2018 vintage alone, matching the total of potential refinance candidates in the 2013-2017 vintages combined, reports Black Knight.

Fannie Mae reports that housing confidence dipped slightly in June, though it remains near survey highs on improved mortgage rate expectations in its monthly Home Purchase Sentiment Index (HPSI). The index fell 0.5 points in June to 91.5 after hitting a near survey high in May. “Growing expectations that mortgage rates will remain steady suggest improved stability for housing affordability and helped keep the HPSI relatively flat this month, despite modest declines in other components,” said Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae.

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