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What’s Ahead For Mortgage Rates This Week : April 2, 2012

Mark Taylor — Mon, 02 Apr 2012 12:45:00 +0000

Mortgage markets improved last week on renewed concerns of a European debt default, and Federal Reserve rhetoric.

Conforming mortgage rates in CA dropped on the news, one week after posting a 5-month high.

A major strike in Spain and growing unrest in Italy, both in opposition to recent austerity measures, have re-ignited fears that the Eurozone may lapse into recession.

These are similar beginnings as with last year’s events in Greece. The difference is that Spain and Italy represent a larger share of the Eurozone’s overall economy, and a debt default could trigger faster contagion.

Mortgage markets gained on the news in a bid of safe haven buying.

Bonds also gained as Federal Reserve Chairman Ben Bernanke clarified his position on the economy with respect to Fed-led stimulus. Summarized, he said that the Federal Reserve is inclined to keep its accommodative policies in place until the labor market is more fully recovered.

In addition, Chairman Bernanke alluded to making direct mortgage market intervention if U.S. economic growth were to stall in the near future.

The news helped push mortgage rates back below 4.000 percent last week, according to Freddie Mac’s weekly Primary Mortgage Market Survey. The average 30-year fixed rate mortgage rate fell to 3.99% for applicants willing to pay an accompanying 0.7 discount plus closing costs.

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

This week’s mortgage market activity will be holiday-shortened so expect volatility — especially surrounding Friday’s March Non-Farm Payrolls report.

More commonly called “the jobs report”, Non-Farm Payrolls details national employment rates and gains or losses in the workforce size. Lately, what’s been good for jobs has been good for the economy so if the actual number of jobs created exceeds the 200,000 projected by economists, or if the Unemployment Rate drops off its current 8.3% reading, look for mortgage rates to rise.

In general, economic expansion is bad for mortgage rates throughout Scottsdale and the nation.

Other market-moving news this week includes Tuesday’s FOMC Minutes release and Thursday Jobless Claims data.

What’s Ahead For Mortgage Rates This Week : November 28, 2011

Mark Taylor — Mon, 28 Nov 2011 13:45:00 +0000

Mortgage markets worsened slightly last week through a bouncy, holiday-shortened trading week. Markets were closed Thursday for Thanksgiving and re-opened only briefly Friday.

As in past weeks, though, economic, political, and financial news from the Eurozone dictated the direction of U.S. mortgage-backed bonds.

As Greece — and now Italy — have faltered, investors have sought to preserve their respective principal, moving money from unsafe assets to safe ones, a class which includes Fannie Mae- and Freddie Mac-backed mortgage bonds.

This investment pattern is known as “safe haven” buying and it’s why mortgage rates tend to improve when large economies grow unstable. Government mortgage bonds are considered among the safest securities available.

The average 30-year fixed rate mortgage is available for 3.98%, according to Freddie Mac, with borrowers expected to pay an accompanying 0.7 discount points. 1 “discount point” is a loan fee equal to 1 percent of your loan size.

“No-point loans” carry higher rates than the Freddie Mac-published figures, but come with lower closing costs.

This week, there are several reasons to expect mortgage rates to rise throughout AZ.

First, markets are speculating that the IMF will lend Italy 600 billion euro to help avert financial crisis. This move would reverse the safe haven buying that’s characterized the last few weeks of trading, thereby leading mortgage rates higher.

A second reason is that they are early reports that Black Friday shoppers out-spent analyst estimates. Consumer spending is the largest part of the U.S. economy so, if spending is up, the economy should be up, too.

As before, this would reverse some of the safe haven buying that’s helped keep mortgage rates low.

Lastly, this week is stuffed with new data including Friday’s always-important Non-Farm Payrolls report. Wall Street expects 116,000 net new jobs created in November. If the actual figure is much higher, mortgage rates will rise.

Expect mortgage rates to be volatile this week. Your quoted mortgage rates could vary by as much as a quarter-percent from day-to-day. If you’re nervous about losing a low rate that’s been offered to you, consider locking in.

What’s Ahead For Mortgage Rates This Week : November 21, 2011

Mark Taylor — Mon, 21 Nov 2011 13:45:00 +0000

Mortgage markets went unchanged last week as Wall Street traded on new debt stress within the Eurozone, and stronger-than-expected economic data here at home.

Rates moved very little from Monday to Friday and the storyline’s not expected to change much this week for today’s rate shoppers.

According to Freddie Mac, conforming 30-year fixed rate mortgages remain priced at 4.000% with 0.7 discount points on average, where 1 discount point equals one percent of the loan size. For people who prefer “zero-point” mortgages, expect a mortgage rate above 4.000%.

By contrast, loans with 1 point or more are priced below 4.000 percent.

However, in this holiday-shortened trading week, mortgage volatility should be up, and rates may finally break from the 4.000 benchmark we’ve hovered since November 1.

What’s unclear is whether rates will rise or fall.

For 8 months, we’ve talked of how events in Greece have influenced the U.S. mortgage market and, how each time Greece moved to the precipice of default, the U.S. mortgage bond market improved, causing mortgage rates to fall.

Last week, similar default concerns emerged for Italy and Spain. This applied downward pressure on U.S. mortgage rates, but a strong retail sales report; a better-than-expected New Home Sales data; and soaring homebuilder confidence renewed talk of domestic inflation in 2012 and beyond.

Inflation erodes the value of the U.S. dollar and leads to higher mortgage rates.

This week, we get a full set of data :

Monday : Existing Home Sales
Tuesday : FOMC Minutes; GDP; 5-Year Treasury Auction
Wednesday : Jobless Claims; Personal Income and Outlays; Consumer Sentiment

In addition, Wednesday marks the deadline for the congressional “super-committee” tasked with finding $1.2 trillion in federal budget savings over the next 10 years. The committee was formed in the wake of August’s downgrade of U.S. federal debt by Standard & Poors.

If Congress fails to meet its goal in time, stock markets should suffer and mortgage rates may fall.

What’s Ahead For Mortgage Rates This Week : November 14, 2011

Mark Taylor — Mon, 14 Nov 2011 13:45:00 +0000

Amid a dearth of new U.S. economic data, Eurozone developments led mortgage markets down in last week’s holiday-shortened trading week. Mortgage rates across Arizona worsened slightly, increasing week-over-week for the first time in a month.

Freddie Mac reports the average 30-year fixed rate mortgage at 3.99% with an accompanying 0.7 discount points. Discount points are loan fees, and 1 discount point is equal to 1 percent of your loan size.

Greece has dominated mortgage market headlines since February. As the nation-state aims to reign in its national spending, it has also adopted harsh austerity measures. The combination is meant to prevent future debt defaults, but global investors remain concerned that problems in Greece may spill over into other Eurozone nations.

As those concerns have grown, U.S. mortgage markets have benefited. This is because U.S. mortgage markets are backed by the U.S. government, and investors treat the U.S. mortgage market as “safe” compared to other security-types.

Safe investments are in high demand during uncertain times, often improving in price. This pattern is known as Safe Haven Buying and it’s one reason why mortgage rates tend to fall when the economy is sagging. Mortgage rates move opposite of mortgage bond prices.

This week, U.S. economic data returns, but markets will still be watching the Eurozone. Sunday, Italy changed leadership, in part, to restore market confidence in its ability to get its debt load under control.

Expect developments in Italy to sway U.S. mortgage rates this week. In addition, rates will respond to a rash of economic data and Fed speakers :

Tuesday : Producer Price Index, Retail Sales, 5 Fed speakers
Wednesday : Consumer Price Index, Housing Price Index, 2 Fed speakers
Thursday : Housing Starts, Jobless Claims, 1 Fed speaker

Mortgage rates remain near all-time lows, with not much room to drop. If you’re shopping for a mortgage rates, therefore, consider locking in. As Greece and Italy show signs of moving forward, expect Safe Haven Buying to recede, and mortgage rates to rise.

As Jobs Tally Fades, Mortgage Rates Fall

Mark Taylor — Wed, 07 Sep 2011 12:47:06 +0000

The U.S. economy is no longer adding new jobs.

Last Friday, in its monthly Non-Farm Payrolls report, the Bureau of Labor Statistics reported that the U.S. economy added exactly zero new jobs in August as the national Unemployment Rate held steady at 9.1 percent.

Despite the “zero” reading, the jobs figures were in the red. This is because the BLS issued revisions to its June and July figures that adjusted the two months of data down by 58,000 jobs.

Economists had expected a monthly reading of +75,000. Their estimates missed.

The weaker-than-expected jobs data fueled a stock market sell-off that pushed stocks down 2.5% and spurred a bond market rally.

Mortgage bonds — the securities on which mortgage rates in Scottsdale are based — improved Friday ahead of Labor Day Weekend, and carried that momentum into Monday. While the U.S. markets were closed, global investors snapped up “safe” assets in fear of a second wave of financial crises. Already this year, markets have grappled with sovereign debt concerns in Greece and Portugal.

Now, Italy is facing similar international scrutiny, forcing markets to question the health of the Eurozone.

Concerns like these tend to benefit home buyers and mortgage rate shoppers and that’s exactly what we’re seeing.

Mortgage rates are falling this week. Rates may reverse quickly, however.

Later this month, the Federal Reserve and White House are each expected to add stimulus to the U.S. economy. If they do, it may push investors back into risky assets including equities at the expense of safe securities. This would spark a bond market sell-off and send rates higher.

Possibly by a lot.

Therefore, if you’re currently looking for home or comparing rates between lenders, consider executing sooner rather than later. Mortgage rates are low today, but low rates may not last. And when rates reverse higher, it will likely happen fast.

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