Addicted to Data…

  • December 17, 2013


Ever since Ben Bernanke claimed the decision to taper bond purchases would be dependent on economic data, the market has been addicted to every news release. I wonder if he knew such a small phrase could command such attention.   Ever since the market has become more volatile, reacting to every data point in fear bond tapering will begin. That could all end tomorrow… hopefully.  I know I have said it before, but this time I’m serious.

  • Ok, let’s do one data point. This morning the NAHB Housing Market Index rose four points in December and Current Sales Index rose six points indicating the housing industry will continue to improve.
  • This week, every economic data point is dwarfed by the FOMC announcement tomorrow. Investors appear to be comfortable with a taper announcement. However, if we don’t get a definitive answer from Bernanke we could see some big swings in mortgage rates. We just need an answer, Ben!
  • In other news, yesterday Fannie Mae and Freddie Mac increased their Loan Level Price Adjustments to better align pricing with the associated risk. This means depending on your FICO score and LTV, Fannie and Freddie will charge you more to insure your 30 year mortgage.
  • Higher LTVs (loan to value) and low FICO borrowers will be disproportionately impacted.

Tomorrow at 2 PM the FOMC minutes will be released. We will all be waiting, watching and hoping we can finally break free from this economic news bender we have been on.

By Lindsey Fediuk, Quicken Loans Capital Markets Analyst

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