What’s Ahead For Mortgage Rates This Week : October 24, 2011

Greece may not get its aidMortgage markets improved last week on worries that Eurozone leaders would decline to send aid to Greece. These concerns overshadowed optimism for the U.S. economy, the result of several strong data points.

Conforming rates across Florida eased, giving homeowners and rate shoppers yet another chance to nab historically-low mortgage rates. FHA mortgage rates remained low, too.

According to Freddie Mac, the average 30-year fixed rate mortgage rate is now 4.11% with 0.8 discount points. For loans with zero points, expect to pay slightly higher rates. 

Rate-shoppers and home buyers would do well to pay attention.

This week’s may be as good as mortgage rates get. Possibly forever. This is because the market conditions that helped rates stay low — a weak U.S. economy and uncertainty in Europe — are eroding.

The U.S. economy has posted strong jobs, spending, and confidence figures in the past 3 weeks and Eurozone leaders appear closing making a deal that will help Greece avoid a sovereign debt default.

Once markets no longer worry about these two events, rates are expected to surge.

Eurozone leads met all weekend and have chosen Wednesday, October 26, as a likely “decision date” for Greece. If that date holds, and if an agreement can be reached, U.S. mortgage bonds will sell-off and mortgage rates will rise.

The housing sector is set to release important news this week, too.

After last month’s increase in Housing Starts and steady Existing Home Sales report, Wall Street will watch for this week’s New Home Sales, Case-Shiller Index and Pending Home Sales Index. If momentum stays strong for housing, that, too, should pressure mortgage rates higher.

Mortgage rates remain near all-time lows. If you’ve yet to lock your mortgage rate, or are still shopping, consider that rates have more room to rise than to fall. The “safe play” is to execute a lock today.

What's Ahead For Mortgage Rates This Week : October 11, 2011

Unemployment Rate (2008-2011)Mortgage markets worsened last week as safe haven buying eased and demand for mortgage-backed bonds dropped. As in most weeks since March 2011, Greece and U.S. jobs dictated market direction.

Conforming mortgage rates in Ohio rose last week, lifting rates off their all-time lows and causing consternation among the nation’s would-be buyers and refinancers.

Last week’s action may surprise you. After all, Freddie Mac’s weekly mortgage rate survey said average, 30-year fixed rate mortgages had dipped, dropping to 3.94% — the first time the average rate reported sub-4 percent.

A keen eye, however, revealed the another truth.

Yes, the average 30-year fixed rate mortgage did go sub-4 percent, but, in order to get those rates, applicants were suddenly required to pay 0.8 “discount points”. This is an increase of 0.1 discount points from the week prior, a change in loan cost thatr reduces the benefit of falling mortgage rates.

1 discount point is equal to 1 percent of your loan size.

All of that is history now, however,. Rates climbed each day last week and are now at their pre-Labor Day levels. The Refi Boom may not be over, but it may be stalled.

This week, mortgage rates may continue to climb. There is talk within the Eurozone that Germany and France will come to Greece’s aid, and that a plan will be solidified prior to November 3. This would boost stock markets at the expense of bonds, leading to higher mortgage rates.

In addition, last week’s strong employment data has renewed speculation that the U.S. economy is, in fact, healthy so analysts are now watching for Friday’s Retail Sales data. 

Because consumer spending is an economic catalyst, if Retail Sales shows strength, mortgage rates should rise.

And, lastly, there is a 10-year Treasury auction Wednesday. Mortgage bonds don’t mirror the treasuries, but when demand is strong for treasuries, it’s often strong for mortgage-backed bonds, too. Therefore, a strong auction of government debt will help hold mortgage rates down.

A weak auction should lead rates higher.

What's Ahead For Mortgage Rates This Week : October 3, 2011

Jobs report due this weekMortgage markets deteriorated last week as optimism for a Greek rescue package increased, and as U.S. consumers showed that, despite falling income levels, spending will not be slowed.

As reported by the government, household income dropped in August, falling 0.1 percent and marking the first monthly dip since 2009. Yet, consumer spending still rose, tacking on 0.1 percent. Consumer spending accounts for 70 percent of the U.S. economy.

In addition, last week Eurozone leaders approved a funding increase for the European “bailout fund”. The additional funding raises the probability that Greece will avoid default on its sovereign debt, and that other nations including Italy, Spain, Ireland and Portugal will avoid similar default scenarios.

The moves drew money away from mortgage markets, causing rates to rise.

Conforming mortgage rates in Ohio climbed last week, stymying would-be refinancers in search of the lowest mortgage rates in 60 years. Nationally, fixed rate mortgages were higher by as much as 0.25%.

This week, rates may continue climbing.

First, European leaders are expected to finalize the details of a Greek aid package, a move that would reverse the “safe haven” bid which has played a large role in keeping U.S. mortgage rates lows.

Second, the jobs report is due.

Economists are expecting 65,000 net new jobs in September and a slight increase in the Unemployment Rate. A deviation from either consensus expectation should cause mortgage rates to move. 

If it’s shown that more than 65,000 jobs were created last month, mortgage rates should rise on the prospect of a recovering economy. To the contrary, though, if it’s shown that fewer than 65,000 jobs were created, mortgage rates should fall.

The jobs report will be released Friday morning, 8:30 AM ET.

If you’re shopping for a mortgage right now, be aware that rates could move in either direction, but there’s a lot more room for rates to rise than to fall. The “safe” course of action is to lock a rate today.

 

What's Ahead For Mortgage Rates This Week : September 26, 2011

Fed Funds Rate 2008-2011Mortgage markets improved last week as the Federal Reserve provided new market stimulus and the Eurozone continued to grapple with Greek’s sovereign debt issues.

Conforming mortgage rates fell in Ohio last week overall, dropping for the second straight week.

For rate shoppers, the best day on which to lock a mortgage rate last week proved to be Thursday.

Fresh off the Federal Reserve’s Wednesday afternoon announcement that the group will launch a $400 billion program in support of longer-term bonds, mortgage rates fell. This occurred because mortgage rates are based on the price of mortgage-backed bonds, and mortgage bonds are a beneficiary of the Fed’s new program.

Those gains were short-lived, however, because Friday morning, when the market opened, mortgage bonds were deteriorated, and that momentum carried through to the afternoon.

By the time the markets closed for the weekend, nearly all of the Fed-led gains had been drained from mortgage bonds.

Within a matter of 48 hours, the average 30-year fixed-rate mortgage rates had plunged — then surged — 0.250 percent.

The speed at which rates changed underscores how tough it can be to shop for a mortgage these days. If you were quick on Thursday, you locked your rate at its low. If you “slept on it”, though, or even took too much time to think, you not only missed the best mortgage rates in more than 50 years, you missed it by entire quarter-percent.

On a $200,000 mortgage, that’s an approximately monthly payment difference of $30 per month.

This week, mortgage rates should be similarly volatile. There is a lot of economic news set for release, and the Eurozone is rumored to have a plan to save Greece from debt default.  Depending on the strength of said data, and the passage of a Greek default plan, just how mortgage rates will change is unknown.

If you’re shopping for mortgage rates, the safe path is to lock what you can. Mortgage rates may fall this week, but what if they don’t? Rates have a lot farther to rise than to fall.

What's Ahead For Mortgage Rates This Week : September 19, 2011

FOMC meets September 20-21Mortgage bonds worsened last week as Eurozone default fears eased abroad, and expectations for a domestic stimulus increased. 

Mortgage rates rose for the first time in three weeks last week, pushing conforming and FHA mortgage rates in Florida off their all-time, historical lows. Rates were at their lowest Tuesday morning, then rose through Friday’s afternoon closing. 

Markets open this week with an eye toward the world’s central banks.

In the Eurozone, central bankers (continue to) discuss the debt burdens of Greece and whether a coordinated intervention is necessary. Without it, some economists believe that the nation-state will default on its sovereign debt, which would then create additional financial stress within other nations in the region.

Italy is included among those countries.

In the United States, central bankers are making equally-important choices. 

The Federal Open Market Committee will emerge from a 2-day meeting Wednesday and is expected to announce new stimulus for the U.S. economy.

Since 2009, the Federal Reserve has twice stimulated the economy via an open-market, bond buying initiative. The programs created demand for mortgage bonds which, in turn, lowered mortgage rates for U.S. homeowners. If the Fed chooses this path a third time, expect for mortgage rates to fall.

If the Fed’s sponsored stimulus is something else, however — or if the Fed choose to do nothing — mortgage rates may rise.

There is economic data due this week, including the Existing Home Sales and Housing Starts report, but it will be the world’s central bankers that sit in spotlights. 

Expect volatile mortgage rates this week. Wall Street can only guess what governments will do to stimulate their respective economies and can lead to wild swings in pricing. The “safe play” is to lock a rate while we’re still near all-time lows.

Once rates reverse higher, they’re expected to rise quickly.

What's Ahead For Mortgage Rates This Week : September 12, 2011

Eurozone trouble aids mortgage ratesMortgage markets improved last week as a weakening Eurozone and questions about the U.S. economy sparked a global flight-to-quality. Conforming and FHA mortgage rates improved for the second week in a row.

The storylines should sound familiar by now. They are the same ones that have dictated the path of mortgage rates since April 2011. As a result, according to Freddie Mac, mortgage rates across Florida and nationwide are now at an all-time low.

Not in 50 years of tracking mortgage rates has pricing been so favorable.

Last week’s holiday-shortened week didn’t begin well for rate shoppers. Rates moved higher on the expectation of additional economic stimulus from two separate parts of the government — the Federal Reserve and Congress. 

Wall Street held high hopes for Ben Bernanke’s address to the Economic Club of Minnesota, and for the President’s address to a joint session of Congress. It expected Fed Chief Bernanke to reveal clues about the Fed’s next move; and it expected the President to unleash a massive jobs creation program that would put more Americans to work.

Both outcomes would have harmed mortgage rates as money flowed into stocks. However, neither happened. Bernanke kept mum on the Federal Reserve’s options and the White House announced a jobs program smaller in scope than was expected.

Mortgage rates fell throughout the day Thursday then received a big boost Friday.

Amid rumors of a pending Greek default and the potential credit downgrades of several Eurozone banking groups, safe haven buying picked up and drove mortgage rates down.

Markets open this week with rates lower than they’ve ever been in history.

There isn’t much new data set for release this week so market expectations will continue to set the direction in which mortgage rates go. If concerns for a Eurozone default rise, mortgage rates should fall. Conversely, if Eurozone chatter settles, mortgage rates should rise.

For now, mortgage rates remain at all-time lows and should not be taken for granted. If you see a rate that makes sense for you, consider locking it in.

What’s Ahead For Mortgage Rates This Week : September 6, 2011

Eurozone debt concerns resurfaceMortgage markets improved last week on a weak jobs report, expectation for new market stimulus, growing evidence of a global economic slowdown. Rates were especially volatile, too, with the long Labor Day Weekend looming.

Overall, conforming mortgage rates in Ohio improved for the first time in 3 weeks. On a product-by-product basis, though, mortgage rates are faring differently.

According to the Freddie Mac weekly mortgage rate survey, last week, the 30-year fixed rate mortgage was unchanged but the 15-year fixed rate mortgage and the 5-year ARM fell.

The 5-year ARM is at a new all-time low for qualified borrowers.

A drop in 5-year ARM rates without a corresponding drop in 30-year fixed mortgage rates signals that markets expect the economy to stabilize over the long-term but with weakness in the near-term. The 5-year ARM’s ultra-low rates suggests marked weakness ahead.

The 5-year ARM may get another boost this week, too.

While U.S. markets were closed for Labor Day, Eurozone nations were hit with new wave of sovereign debt concern, this time centered on Italy. Greece, Portugal and Ireland have already been the subject of debt default debate this year. Italy’s inclusion hit equity market hard and safe-haven buying re-commenced.

This should give a good start to mortgage rates this week. Look for rates to start lower. That’s not to say, however, that they’ll finish the week lower. With very little economic data due for release, markets will move on momentum and momentum can change in a flash.

The two biggest potential market movers both come Thursday. Fed Chairman Ben Bernanke speaks in Minnesota at 1:00 PM, and United States President Barack Obama addresses the nation at 7:00 PM. Both speeches are highly anticipated and should cause markets to move.

What's Ahead For Mortgage Rates This Week : September 6, 2011

Eurozone debt concerns resurfaceMortgage markets improved last week on a weak jobs report, expectation for new market stimulus, growing evidence of a global economic slowdown. Rates were especially volatile, too, with the long Labor Day Weekend looming.

Overall, conforming mortgage rates in Ohio improved for the first time in 3 weeks. On a product-by-product basis, though, mortgage rates are faring differently.

According to the Freddie Mac weekly mortgage rate survey, last week, the 30-year fixed rate mortgage was unchanged but the 15-year fixed rate mortgage and the 5-year ARM fell.

The 5-year ARM is at a new all-time low for qualified borrowers.

A drop in 5-year ARM rates without a corresponding drop in 30-year fixed mortgage rates signals that markets expect the economy to stabilize over the long-term but with weakness in the near-term. The 5-year ARM’s ultra-low rates suggests marked weakness ahead.

The 5-year ARM may get another boost this week, too.

While U.S. markets were closed for Labor Day, Eurozone nations were hit with new wave of sovereign debt concern, this time centered on Italy. Greece, Portugal and Ireland have already been the subject of debt default debate this year. Italy’s inclusion hit equity market hard and safe-haven buying re-commenced.

This should give a good start to mortgage rates this week. Look for rates to start lower. That’s not to say, however, that they’ll finish the week lower. With very little economic data due for release, markets will move on momentum and momentum can change in a flash.

The two biggest potential market movers both come Thursday. Fed Chairman Ben Bernanke speaks in Minnesota at 1:00 PM, and United States President Barack Obama addresses the nation at 7:00 PM. Both speeches are highly anticipated and should cause markets to move.

What's Ahead For Mortgage Rates This Week : August 22, 2011

Eurozone concerns aid mortgage ratesMortgage markets improved again last week, pushing mortgage rates in Ohio to an all-time low; lower than the lows set last November, even.

Last week’s low mortgage rate drivers are primarily European. Joining the debt concerns that have dogged Europe since March, a fresh wave of doubt has surfaced about the health of some Eurozone banks. The fears sparked a new wave of safe haven buying.

Global equities were socked last week and the Dow Jones Industrial Average fell for the 4th straight week. For home buyers , though, the timing may be perfect. As stock markets lose, bond markets gain and when bond markets gain, mortgage rates drop.

According to government-group Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 4.17% last week with 0.7 points. This is the lowest rate-and-points combination in history.

The 5-year ARM fell to 3.08 with 0.5 points.

As mortgage rates fall, though, be wary of trying to “time the market”. It’s impossible to know when rates have bottomed and mortgage rates tend to spike without notice. That’s what happened in May 2010. And then again in November 2010. And then a third time in April 2011.

When rates rise, they could tack on 0.500% or more overnight.

This week, there is a lot that can move mortgage rates. With housing data set for Tuesday release, the Eurozone stories still unfolding, and three Treasury auctions planned, it’s best to be ready for locking.

If you’re floating a mortgage rate or still shopping, consider locking your rate as soon as possible. Rates trended higher to close out last week and will be riding that momentum forward. Rates are lower than they’ve been in history.

Take advantage of it.

What’s Ahead For Mortgage Rates This Week : August 22, 2011

Eurozone concerns aid mortgage ratesMortgage markets improved again last week, pushing mortgage rates in Ohio to an all-time low; lower than the lows set last November, even.

Last week’s low mortgage rate drivers are primarily European. Joining the debt concerns that have dogged Europe since March, a fresh wave of doubt has surfaced about the health of some Eurozone banks. The fears sparked a new wave of safe haven buying.

Global equities were socked last week and the Dow Jones Industrial Average fell for the 4th straight week. For home buyers , though, the timing may be perfect. As stock markets lose, bond markets gain and when bond markets gain, mortgage rates drop.

According to government-group Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 4.17% last week with 0.7 points. This is the lowest rate-and-points combination in history.

The 5-year ARM fell to 3.08 with 0.5 points.

As mortgage rates fall, though, be wary of trying to “time the market”. It’s impossible to know when rates have bottomed and mortgage rates tend to spike without notice. That’s what happened in May 2010. And then again in November 2010. And then a third time in April 2011.

When rates rise, they could tack on 0.500% or more overnight.

This week, there is a lot that can move mortgage rates. With housing data set for Tuesday release, the Eurozone stories still unfolding, and three Treasury auctions planned, it’s best to be ready for locking.

If you’re floating a mortgage rate or still shopping, consider locking your rate as soon as possible. Rates trended higher to close out last week and will be riding that momentum forward. Rates are lower than they’ve been in history.

Take advantage of it.