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Mid-January Report: The Weekly Market Update

Mid-January Report: The Weekly Market Update
McLean Mortgage

Busy Start to Year

Busy Start to Year

Believe it or not, we are halfway through the first month of the year. While a few weeks passing may not seem like much, these are very exciting times. Americans are reacting to a new tax plan, stocks have already broken records and we have had the first natural disaster of the year — a bomb-cyclone. A few weeks ago, most of us had never heard of a bomb-cyclone. And even though we did not know, since we are publishing from the east coast, we certainly felt the cold. When it snows in Florida, it is definitely a weather event.

The question is–what have we learned since the beginning of the year? We have learned that the stock market’s surge in anticipation of the adoption of the tax plan is not over now that the plan has come to fruition. There was some concern that all the gains were built into the pricing of stocks, but the New Year has brought more good news in this regard. Of course, this does not mean that the gains will last all year — but it was a good start.

In addition, stocks are not the only items that are going up in price. Oil prices have topped $60 per barrel for the first time since 2015. Interest rates have also risen, though the move has been more pronounced with regard to shorter-term rates. Again, this does not mean that oil prices and rates are moving up all year. On the other hand, if the economy does continue to expand and this expansion accelerates because of lower tax rates, it makes sense that rates and commodity prices will move up. Yes, it is hard to get a feel for a year based upon two weeks of activity, but we already have some interesting news to reflect upon this year.

The Weekly Market Update

Rates bounced back in the past week as the rising stock market and growing economy continue to push long-term rates higher. For the week ending January 11, Freddie Mac announced that 30-year fixed rates increased to 3.99% from 3.95% the week before. The average for 15-year loans rose to 3.44% and the average for five-year adjustables climbed slightly to 3.46%. A year ago, 30-year fixed rates averaged 4.12%, higher than today’s level.

Attributed to Sean Becketti, chief economist, Freddie Mac — “After dipping slightly last week, Treasury yields surged this week amidst sell-offs in the bond market. The 10-year Treasury yield, for instance, reached its highest point since March of last year. Rates on home loans followed Treasury yields and ticked up modestly across the board. Rates on 30-year fixed loans averaged 3.99 percent, up 4 basis points from a week ago.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.