Several weeks ago we wrote about how data from the Zillow Mortgage Marketplace (ZMM)—an online mortgage lending platform that connects thousands of borrowers and lenders each day—can be used to analyze mortgage market reactions to macroeconomic news. See the original research brief here.
In particular, we looked at how the average interest rate quoted on ZMM changes over the course of the week when policy statements from the Federal Reserve Board (FRB) surprise markets. Since these statements are released on Wednesday afternoons, we compared the average rate quoted on Monday and Tuesday of a given week, to the average rate quoted on Thursday and Friday of the same week. We found that in weeks when the Fed surprised markets, there was a statistically significant change over the course of the week whereas this change did not occur in weeks when there was no Fed policy statement or when the Fed statement did not surprise markets.
Yesterday at 2 p.m. EDT, the Fed released its policy statement from its April meeting. There were no surprises in the statement— as markets had expected, the central bank continued to reduce its pace of asset purchases. The average interest rate quoted on ZMM yesterday for a 30-year Fixed Rate conforming mortgage for a borrower with very high credit (FICO score of 760 or higher), the rate dropped about 3 basis points over the course of the day—from 4.20 percent between 8 a.m. and 2 p.m. EDT, to 4.17 percent between 2:30 p.m. and 5 p.m. EDT. The change is not statistically significant at conventional levels. The average rate dropped by a similar magnitude for other market segments.