Mortgage markets were much quieter over the past week, with far less volatility than was seen during the prior week. A rally in global stock markets was the main influence on mortgage rates, which ended the week a little higher.
Concerns about the pace of global economic growth caused a large stock market decline earlier this month. At its low, the Dow stock index was down about 7% from its recent highs. During this period, investors shifted to safer assets, including Mortgage-Backed Securities (MBS), helping to push mortgage rates down to the lowest levels of the year. Over the past week, though, reports that officials from the European Central Bank (ECB) and from the Chinese Central Bank were considering additional stimulus measures caused a rally in global stock markets.
The housing market data released over the past week was encouraging. Existing Home Sales posted a modest increase in September to the highest level of the year, while inventories of existing homes for sale dropped slightly. Housing Starts jumped 6% in September, following a sharp decline in August. Most of the volatility in the recent Housing Starts data has been due to the multi-family segment.
Looking ahead, the next Fed meeting will take place on October 29. Investors will be looking for information about the timing of the first fed funds rate hike. Before the meeting, New Home Sales and Pending Home Sales will be released. Durable Orders, an important indicator of economic growth, will also come out. On October 30, the key report on third quarter Gross Domestic Product (GDP) will be released.