Oil, Fed Rate Cut, Mortgage Rates Improve

Smoke billows from an Aramco oil facility in Abqaiq about 60km (37 miles) southwest of Dhahran in Saudi Arabia. (Photo credit should read -/AFP/Getty Images)
/AFP/Getty ImagesAttack on Saudi Arabia’s Oil

Oil – Saudi Arabia suspended 1/2 of its daily oil production after one of their central processing facility was attacked exposing its vulnerability. This facility produced 5% of total global supply and its loss caused oil prices to spike by approximately 13%.

Rates – after increasingly significantly in September, rates improved this week after attacks on Saudi oil fields and the Fed announced inflation is running below their 2% target. There is a lot of ground to be recovered before getting back to August’s lows.

Fed – as expected the Fed cut short term rates by 0.25%. The Fed controls overnight lending rates that banks lend each-other money at. This adjustment lowers the rate on Home Equity Line’s of Credit (HELOC’s) but not on 30 year fixed mortgages. From the dot plot above you can see that only 7/17 Fed Members anticipate another rate hike this year. As you can see the forecast is pretty varied among members and as Fed Chair Powell continues to say “data will determine” whether an additional cut will come this year.

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Builder Confidence – is at its highest level of the year showing continued strength in the new construction market particularly in the South & West.

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