IMF warns US Federal Reserve should delay rate hike until 2016
The U.S. Federal Reserve should delay a rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation, the International Monetary Fund said in its annual assessment of the economy on Thursday.
The fund’s report comes amid signs that some rate setters at the U.S. central bank are also pushing for rate hikes to be delayed until there are clearer signs of a sustained recovery. U.S. data has been mixed and the economy shrank 0.7 percent in the first quarter.
“Based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016,” the fund said. Watch Video
WASHINGTON, D.C. (June 3, 2015) – Mortgage applications decreased 7.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 29, 2015.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.02 percent from 4.07 percent, with points decreasing to 0.33 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.01 percent from 4.06 percent, with points increasing to 0.30 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.27 percent from 3.29 percent, with points increasing to 0.33 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
Housing News
Real estate activity continued to expand in the twelve Federal Reserve Districts since the last housing report, and the forecats ahead looks positive, according to the latest Beige Book.
This comes after April’s report that residential real estate activity was improving steadily in most districts.
Across the nation, homes sales recorded modest to moderate gains, except the Minneapolis district, which strongly rose on a year-over-year basis.
Philadelphia was also an exception since builders reported mixed conditions for new home sales and brokers noted slightly slower existing-home sales in April on a year-over-year basis.
Sales of low- and medium-priced homes outpaced sales of higher-priced homes in the Kansas City district, while the Cleveland district said most new-home contracts were in the move-up price points.
The Dallas district noted declining sales in Houston for mid- priced new homes. Tight inventories restrained sales growth in the Boston and New York districts, although pending sales were up in the Boston district, suggesting that closings would rise in coming months.
Home prices rose across much of the country, which contacts in some districts attributed to low inventories relative to demand.
On the other side, residential construction was flat to up during the reporting period, although a few districts reported a slower pace of homebuilding activity due to financing and capacity constraints and severe weather.
Residential construction activity increased slightly in the Chicago district, where contacts expressed concern that the current strong pace of apartment construction was unsustainable.
Mortgage lending was mixed across the nation, with residential real estate lending growing in the San Francisco District. One contact reported increased hiring of loan originators, processors and underwriters to meet growing mortgage demand.
The Richmond, Chicago, St. Louis, Kansas City and Dallas districts posted an uptick in residential mortgage loans, and contacts in the Cleveland District said the increase in residential mortgage demand was largely for new home purchases.
Economic News
Fed’s Brainard: Not seeing significant Q2 bounce
Economic data so far do not suggest that the U.S. will see a significant second quarter rebound, Federal Reserve Governor Lael Brainard said Tuesday.
Brainard, a voting member of the Federal Open Market Committee, also said a strong dollar delays U.S. rates to normal levels. But despite the downbeat assessment of the U.S. economy, she said that a 2015 rate hike is still possible.
“No doubt, bad weather, port disruptions, and statistical issues are responsible for some of the softness in first-quarter indicators of aggregate spending,” she said at the Center for Strategic and International Studies in Washington, D.C. “But there may be reasons not to ignore the recent readings entirely.” Watch video