Big announcement from the White House should move rates lower!

President Trump orders $200 billion of MBS purchases, a move to push mortgage rates lower.

Happy Friday from Local Mortgage!

A really nice week for mortgage rates with a big announcement late Thursday that should move rates down significantly over the coming weeks. We finally broke through and are now at 5.75% for our best 30-year fixed conventional scenario.

This week’s biggest news was supposed to be Friday’s Employment report, which was beneficial for mortgage markets as we added only 50,000 jobs against a consensus forecast of 60,000. In addition, revisions always took away 76,000 jobs from prior reports, all pointing to continued weakness in the labor markets.

But the employment report was trumped by the President’s announcement late Thursday afternoon that the government, through Fannie and Freddie, would purchase $200 billion of mortgage-backed securities (MBS). The potential for added demand for MBS caused yields to fall and mortgage rates to decline.

Recent filings show that GSEs have nearly $200 billion in cash equivalents and about the same amount of room on their balance sheets before hitting their current regulatory cap.  However, this is a little different than the past FED-style QE purchases we have seen before, as it’s not an ongoing commitment to steadily buy MBS. That said, it's definitely something and it definitely suggests rates are headed lower. 

We will see if the rally continues to take rates lower next week. For economic reports, we will get inflation data with the CPI report on Tuesday and retail sales data on Wednesday.

Have a great weekend and as always, thank you for reading.