Jan 3, 2013 | Mortgage Rates
Mortgage rates moved higher Wednesday up congressional leaders voted to avoid the “Fiscal Cliff”.
Mortgage-backed securities (MBS) fell as investors bid up stock prices. Confidence among investors and consumers typically causes mortgage rates to rise. That’s what happened Wednesday.
For Thursday and Friday, expect jobs data to dictate where Worcester County area mortgage rates are headed.
The Federal Reserve has said that the national Unemployment Rate will dictate future monetary policy, with the central banker planning to raise the Fed Funds Rate from its target range near zero percent once joblessness falls to 6.5%. Currently, the jobless rate is 7.7 percent.
As the jobs market improves, equity markets should follow, causing mortgage rates to — again — move higher.
Thursday’s Initial Jobless Claims report has already influenced today’s mortgage rates. New claims rose 10,000 to 372,000 for the week ending December 29, 2012. This is slightly higher than Wall Street expected and mortgage bonds are moving better on the news.
Now, Wall Street turns its attention to Friday’s Non-Farm Payrolls report.
More commonly called “the jobs report”, Non-Farm Payrolls is a monthly publication from the Bureau of Labor Statistics, detailing the U.S. employment situation, sector-by-sector. The economy has added 4.6 million jobs since 2010 and analysts expect another 155,000 added in December 2012.
The Unemployment Rate is expected to tally 7.8%.
As more people get back to work, the nation’s collective disposable income rises, which gives a boost to the U.S. economy. Furthermore, more taxes are paid to local, state and federal governments which are often used to finance construction and development — two jobs creators in their own right.
Furthermore, as the ranks of the employed increase, so does the national pool of potential home buyers. With demand for homes high and rents rising in many U.S. cities, demand for homes is expected to grow. Home supplies are shrinking.
If you’re currently floating a mortgage rate, or wondering whether it’s a good time to buy a home, consider than an improving economy may lead mortgage rates higher; and an improving jobs market may lead home prices higher.
The market is ripe for a refinance or purchase today.
Dec 31, 2012 | Mortgage Rates
Mortgage bonds improved last week, pushing mortgage rates lower in Massachusetts and nationwide.
Positive economic news and strong housing data was trumped by ongoing Fiscal Cliff discussions on Capitol Hill.
The “Fiscal Cliff” is meant to represent January 1, 2013 — the date on which mandatory spending cuts are enacted by Congress and on which tax rates increases for many U.S. taxpayers.
Some analysts believe that if these two events are to occur simultaneously, it would derail the current U.S. economic expansion and revert the economy back into recession. That concern has spurred a flight-to-quality which has benefited mortgage bonds and, therefore, U.S. mortgage rates.
For example, last week, Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.35 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points plus a full set of closing costs. This is a 0.02 percentage point reduction from the week prior.
The average 15-year fixed rate mortgage rate was unchanged last week at 2.66 percent for borrowers paying an accompanying 0.7 discount points plus closing costs.
In this holiday-shortened week, mortgage rates may fade again.
Congress convened over the weekend in order to discuss the impending Fiscal Cliff, and ways to avoid it. Talks have been ongoing since this year’s election yet it appears unlikely that the simultaneous expiration will be avoided.
How this would affect the economy is unknown but mortgage markets would witness an immediate boost of demand, leading Massachusetts mortgage rates lower. Conventional, FHA and VA mortgage rates would all likely benefit.
And then, Wall Street will turn its attention to Friday’s December Non-Farm Payroll report.
Mortgage rates are expected to make big moves upon the report’s release. This is because, earlier this month, the Federal Reserve said it would begin raising the Fed Funds Rate only after the Unemployment Rate reaches 6.5 percent. Currently, the Unemployment Rate is 7.7 percent. If December’s jobless rate slips, moving closer to the Fed’s stated target, mortgage rates are expected to rise.
Similarly, if the Unemployment Rate rises, mortgage rates are expected to drop.
Dec 24, 2012 | Mortgage Rates
Mortgage markets worsened last week amid ongoing discussions budget and tax conversations in Washington, D.C., and the release of key housing and economic data.
Mortgage rates climbed in Massachusetts and nationwide.
Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.37 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points at closing, plus closing costs — an increase of 0.05 percentage points from the week prior.
The average 15-year fixed rate mortgage rate was listed at 2.65 percent nationwide with an accompanying 0.7 discount points plus a full set of closing costs.
With certain government funding and tax reductions set to expire December 31, legislators appear unlikely to avoid what’s been called the “Fiscal Cliff”. Some economists believe that reaching January 1 with no agreement in place will set the economy in to recession.
Mortgage rates tend to improve on “negative” news for the economy, which partially explains why mortgage rates made a small comeback late in the week.
In other news, according the National Association of REALTORS®, Existing Home Sales reached their highest point since November 2009, climbing to 5.04 million homes sold on a seasonally-adjusted, annualized basis. In addition, the real estate trade group reports that the Existing Home Supply has dropped to 4.8 months — a figure firmly suggesting a “seller’s market”.
Separately, the Commerce Department reported single-family housing starts rising, too; down 4.1 percent in November but up nearly 23 percent as compared to November 2011.
This week, Fiscal Cliff discussions are likely to dominate mortgage markets. The trading week will be holiday-shortened and volume will be lighter-than-normal. This may lead to volatile pricing and rapid interest rate movements.
Markets close early Monday and remain closed through Tuesday. Wednesday, markets re-open with no new data set for release. Then, Thursday, scheduled economic news events resume Thursday with New Home Sales, Jobless Claims and Consumer Confidence due.
Friday, the Pending Home Sales Index is released.
Dec 17, 2012 | Mortgage Rates
Mortgage bonds worsened last week, moving mortgage rates higher. Economic news was mostly positive and the Federal Open Market Committee (FOMC) changed some of Wall Street expectations for future monetary policy.
Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.32 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points plus closing costs. The average 15-year fixed rate mortgage rate was listed at 2.66 percent nationwide with an accompanying 0.6 discount points plus closing costs.
Both mortgage rates had climbed by week’s end, however. Mortgage rates made their best levels Monday afternoon. Between Tuesday and Friday, mortgage rates in Massachusetts climbed.
Also last week, the National Association of Homebuilders/First American Improving Markets Index (IMI) reported 201 improving metropolitan economies nationwide. This index uses data including local employment statistics and home values to determine whether an area’s economy is “improving”.
76 new areas were added to the IMI list in December as compared to November. The geographic diversity the newly-added markets suggests an overall improvement in the national economy.
Last week’s major event, however, was the 2-day Federal Reserve meeting, which adjourned Wednesday.
The post-meeting press release after included the Fed’s commitment to hold the Fed Funds Rate near zero percent where it’s been since December 2008. However, the Fed announced a change to in its plans to raise the Fed Funds Rate from near-zero at a future date.
Previously, the Fed had said it would raise the Fed Funds Rate beginning in mid-2015. Now, the Fed says it will start to raise rates when the national unemployment rate reaches 6.5 percent.
This week, mortgage rates have a lot to move on including Housing Starts (Wednesday) and Existing Home Sales (Thursday) from the housing sector; Jobless Claims (Thursday) from the Labor Department; and a key inflation reading from the Department of Commerce. Each has the capability to move mortgage rates.
Markets will respond to Fiscal Cliff discussions, too.
Dec 10, 2012 | Mortgage Rates
Mortgage bonds worsened last week as Fiscal Cliff talks moved closer to resolution and as the U.S. economy showed continued signs of growth.
Conforming mortgage rates in Massachusetts rose slightly, edging off the all-time lows late in November.
According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate conforming mortgage rate was 3.34% last week for home buyers and refinancing households willing to pay 0.7 discount points at closing plus a full set of closing costs.
Freddie Mac also showed the 15-year fixed rate mortgage averaging 2.67% with an accompanying 0.7 discount points plus closing costs.
1 discount point is equal to 1 percent of your loan size.
The two big stories that moved rates worse last week were the Fiscal Cliff talks and the November jobs report.
With respect to the Fiscal Cliff, mortgage rates worsened as Capitol Hill moved closer to a deal which would avoid the dual-event of expiring U.S. tax break and a mandated government spending rollback. These events are both scheduled to occur December 31, 2012.
Some analysts believe that these two events — in unison — could slow U.S. economic growth to the point of recession. Other analysts aren’t so sure. However, Wall Street is choosing to be cautious. This is why a break in talks has been good for mortgage rate shoppers of late; and why steps toward avoiding one or both scenarios has been bad for rate shoppers.
Mortgage rates often rise when economic growth is expected. This explains why November’s jobs report pushed mortgage rates worse Friday, too — Wall Street underestimated the Non-Farm Payrolls report which showed 146,000 net new jobs created, and didn’t expect to see the national Unemployment Rate drop to 7.7%.
This week, mortgage rates may rise again with new inflation data and a Retail Sales report set for release.
The big event, though, is the Federal Open Market Committee’s 2-day meeting scheduled, set to begin Tuesday. The FOMC is not expected to add new economic stimulus, but the Fed’s words can carry as much weight as its policies and actions.
The Fed will issue a statement to the markets at 12:30 PM ET Wednesday, and will host a press conference shortly thereafter. Mortgage rates are expected to remain volatile all week.
Dec 3, 2012 | Mortgage Rates
Low mortgage rates are pumping up home affordability.
Average 30-year fixed-rate mortgage rates made a new all-time low in November, continuing this year Refinance Boom and giving fuel to the budding housing market recovery.
At month-end, Freddie Mac’s survey of 125 banks nationwide put the benchmark product’s rate at 3.32% for borrowers willing to pay 0.8 discount points. This is just 0.01 percentage point above the record-low rate establishing prior to Thanksgiving.
The 15-year fixed mortgage is similarly low, posting 2.64 percent nationwide, on average. This, too, is only slightly higher the all-time low set the week prior.
Falling mortgage rates have helped to offset rising home prices in many U.S. cities.
Steady job creation and rising consumer confidence has swelled the pool of home buyers nationwide, causing home inventories to shrink and home prices to rise. The improving economy has also led to rising rents and now, within many housing markets, it’s less costly to buy and own a home than to rent a comparable one.
A $1,000 mortgage payment affords a $225,000 mortgage payment in Massachusetts.
Last week, the economy was shown to be improving.
- The Commerce Department showed that the Gross Domestic Product increased at a 2.7% annual rate in Q3 2012
- The Labor Department showed first-time unemployment filings dropping by 23,000 claims
- The Pending Home Sales Index jumped to its highest point since April 2010
- The Existing Home Sales report showed home sales up 2.1%
- The Case-Shiller Index showed home values making annual gains
In addition, Federal Reserve Ben Bernanke said that the central bank will take action to speed economic growth, should the U.S. economy start to side-step.
This week, there is little on the U.S. economic calendar, save for Friday’s Non-Farm Payrolls report. Wall Street is expecting to see 80,000 net new jobs created in November, and a rise in the national Unemployment Rate to 8.0%.
If the report’s actual results are stronger-than-expected, mortgage rates will likely climb from their all-time lows. If the report comes back weak, rates should stay unchanged.
