Polar Vortex, Shutdown Should Temper Mortgage Rate Response to January Data

For the third week in a row, mortgage rates ended the week roughly where they began it. Rates continue to hover near their lowest levels since March 2018, providing a boost to home buyers just as inventory is starting to rise nationwide.

Over the coming week, all eyes will be on several Fed speakers as markets continue to try and grapple with a shifting monetary policy outlook. Wednesday's release of the minutes from the Federal Open Market Committee's January meeting provided more details about how the Fed plans to manage its legacy recession-era bond portfolio, and made explicit that the committee is monitoring incoming data for how last year's interest rate hikes have spilled over into the broader economy.

This week also will see the release of January housing market data. The housing sector was a soft spot for the economy late last year, in part because of rising interest rates. But interest rates are down and inventory is up in the first two months of 2019 – which should provide more stimulus to the sector. However, it would be a big leap to read too much into the January data. While inventory and interest rates provided a boost, the partial federal government shutdown and the polar vortex that hit much of the country mid-month likely weighed on housing activity.

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