Oct 22, 2012 | Mortgage Rates
Mortgage markets worsened last week as hope for a European economic rebound and stronger-than-expected U.S. economic data moved investors out of mortgage-backed bonds.
Mortgage rates all of types — conventional, FHA and VA — lost ground last week, harming home affordability in Worcester County area and reducing purchasing power nationwide.
Rising rates also thwarted would-be refinancing households hoping to time a market bottom.
The increase runs counter to Freddie Mac’s weekly Primary Mortgage Market Survey which showed the average 30-year fixed rate mortgage rate dropping 2 basis points to 3.37% nationwide.
This contradiction occurred because Freddie Mac’s weekly mortgage rate survey is conducted Monday through Wednesday, and because the majority of the surveyed banks reply to Freddie Mac on Tuesday. As a consequence, Freddie Mac failed to capture this week’s mid-week movement that took mortgage bonds to a one-month worst.
Access to Freddie Mac mortgage rates is for “prime” borrowers and requires payment of discount points plus closing costs.
This week, mortgage rates may rise again. There is a lot of news on which for Wall Street to trade, beginning with the week’s biggest story — the Federal Open Market Committee’s 2-day meeting scheduled for Tuesday and Wednesday.
At the FOMC’s last meeting, the Federal Reserve introduced a third round of qualitative easing (QE3), a program through which the Fed will work to keep mortgage rates low until the economy’s recovery is more complete.
The Fed is expected to announce no new stimulus in this, its seventh of eight scheduled meetings for 2012, however, mortgage rates are typically volatile in the hours after the FOMC adjourns.
New housing data is set for release this week, too.
Wednesday, the U.S. Census Bureau will release September’s tally of New Home Sales. Given the recent strength in Housing Starts and rising confidence among the nation’s home builders, New Home Sales may best analyst calls for 385,000 new home sold last month on a seasonally-adjusted, annualized basis.
Strength in housing has recently correlated with rising mortgage rates.
The housing market’s forward-looking Pending Home Sales Index is released Thursday.
Oct 15, 2012 | Mortgage Rates
Mortgage markets improved slightly last week. With a dearth of new U.S. economic data due for release, investors turned their collective attention to the Europe, China, and the Middle East.
U.S. mortgage rates fell slightly in the holiday-shortened week.
The combination of civil protests, economic slowdowns, and growing political tensions caused investors to dump risky assets in favor of the relative safety provided by the U.S. mortgage bond market.
According to Freddie Mac, the average conforming 30-year fixed rate mortgage is now 3.39% nationwide for borrowers willing to pay 0.7 discount points plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of the borrowed loan size.
As an illustration, a bank’s charge of 0.7 discount points on a $100,000 mortgage would cost $700 to the borrower.
Freddie Mac also reported the average conforming 15-year fixed-rate mortgage rate at 2.70% nationwide with an accompanying 0.6 discount points plus closing costs. Loans with zero discount points carry a higher mortgage rate average.
This week, data returns to Wall Street as a series of housing reports are slated for release, in addition to inflationary reports such Tuesday’s Consumer Price Index (CPI).
The week begins with Retail Sales, released at 8:30 AM ET Monday. On a strong figure, mortgage rates in Worcester County area are expected to climb. This is because Retail Sales data is closely tied to consumer spending and consumer spending accounts for more than two-thirds of the U.S. economy.
A growing economy tends to pull mortgage rates higher.
Tuesday’s CPI may do the same.
Inflation erodes the value of a mortgage bond so when inflation pressures grow, demand for mortgage bonds fall which, in turn, causes mortgage rates to rise. If CPI is higher-than-expected, mortgage rates will likely rise.
Then, there’s a flurry of housing data. The Housing Market Index (Tuesday), Housing Starts (Wednesday) and Existing Home Sales (Friday) all hit this week. Strength in housing may lead mortgage rates higher, harming home affordability for today’s home buyers.
At today’s mortgage rates, every 1/8% increase raises monthly mortgage payments roughly $7 per $100,000 borrowed.
Oct 9, 2012 | Mortgage Rates
Mortgage markets worsened last week for the first time in a month as the U.S. economy showed signs of improvement, and the Eurozone stepped closer to launching its $500 billion euro rescue fund.
Conforming mortgage rates in Massachusetts rose last week on the whole — even though Freddie Mac’s Primary Mortgage Market Survey proclaimed that they fell.
This occurred because Freddie Mac’s weekly mortgage rate survey is conducted between Monday and Tuesday each week and, last week, mortgage rates were lower when the week began. Through Wednesday, Thursday and Friday, however, they rose.
According to the Freddie Mac survey, the average 30-year fixed rate mortgage slipped to 3.36 percent nationwide last week, while the 15-year fixed rate mortgage fell to 2.69 percent. Both rates required 0.6 discount points and both marked all-time lows.
As this week begins, to gain access to the same 3.36% and 2.69% mortgage rates from last week, Massachusetts mortgage applicants should expect to pay more closing costs and/or higher discount points.
Improving U.S. employment data is partially to blame.
Friday morning, the Bureau of Labor Statistics released its September Non-Farm Payrolls report. More commonly called “the jobs report”, the monthly issuance details changes in U.S. employment by sector and reports on the national Unemployment Rate.
In September, accounting for upward revisions to data from July and August, 200,000 net new jobs were created — far exceeding Wall Street’s estimates for 120,000 net new jobs created. Furthermore, the Unemployment Rate unexpectedly dropped to 7.8%.
Jobs are considered a keystone in the U.S. economic recovery. As a result, when the jobs numbers hit Friday, mortgage rates worsened, building on momentum built earlier in the week as Greece moved steps closer to accepting aid from the Eurozone.
In general, since 2010, weakness in the Eurozone has helped push U.S. mortgage rates lower. As Europe regains its footing, therefore, domestic mortgage rates are expected to rise.
This week, in a holiday-shortened week, there will be little new data to move mortgage rates. The Federal Reserve’s Beige Book is released Wednesday and some key inflation data is due for Friday release. Beyond that, mortgage rates will continue to take cues from the Eurozone.
Mortgage rates remain near all-time lows.
Oct 1, 2012 | Mortgage Rates
Mortgage rates dropped to another all-time low last week as concerns for global economic growth helped U.S. home buyers and refinancing households nationwide.
U.S. mortgage rates responded to non-U.S. events and, for rate shoppers and home buyers in Worcester County area , home affordability improved.
Early in the week, with Greece and Spain debating new austerity measures, and with citizen protests rampant, a flight-to-quality helped to boost demand for U.S. mortgage bonds. So did rumors of a weakening Chinese economy.
“Flight-to-quality” is a trading term for when investors shun investment risk in favor of safer, more high-quality portfolio assets. Typically, this involves selling stocks and buying bonds, including mortgage-backed ones.
When demand for mortgage-backed bonds rise, mortgage rates tend to fall.
Demand for bonds is also receiving a boost from the Federal Reserve’s latest market stimulus program — QE3.
“QE3” is a shorthand term for the Fed’s third qualitative easing, a program by which the nation’s central banker buys mortgage-backed securities on the open market in hopes of driving mortgage rates down.
So far, it’s been working. Since the Federal Reserve announced QE3 in mid-September, conforming mortgage rates have been on steady decline.
According to Freddie Mac, the average 30-year fixed rate mortgage rate slipped to 3.40% nationwide last week with an accompanying 0.6 discount points plus closing costs. The average 15-year fixed rate mortgage rate moved to 2.73%, also with 0.6 discount points and closing costs. Both rates are at all-time lows.
This week, mortgage rates have a lot of data on which to trade, and may be poised to bounce higher.
In addition to the release of manufacturing, construction and retail sales reports, the Bureau of Labor Statistics will post its September Non-Farm Payrolls report Friday. More commonly called the “jobs report”, the monthly release takes on added significance now that the Federal Reserve has said that its open-ended QE3 program will be linked to the U.S. jobs economy.
Wall Street expects to see 120,000 net new jobs created in September. If the actual reading exceeds this figure, mortgage rates should rise.
Sep 24, 2012 | Mortgage Rates
Mortgage markets improved for the second consecutive week last week as demand for U.S. mortgage-backed bonds remained high. A series of economic reports showed strength in housing and a stability in jobs.
Wall Street looked past it, however, to send mortgage rates to their lowest levels in history.
One week into the Federal Reserve’s newest bond-buying program, the stimulus appears to be working.
According to Freddie Mac, the average 30-year fixed rate mortgage rate slipped to 3.49% last week for borrowers willing to pay an accompanying 0.6 discount points at the time of closing. Discount points are a one-time closing costs where 1 discount point is equal to one percent of your loan size.
3.49% marks a new all-time low for the 30-year fixed rate mortgage.
The 15-year fixed rate mortgage rate fell to a new all-time low last week, too, dropping to 2.77% with the same accompanying 0.6 discount points.
Mortgage rates in Worcester County area fell despite strong housing data.
- Housing Starts rose 5.5% to a 2-year high
- Existing Home Sales rose 7.8% to a 2-year high
- Building Permits rose 0.2%
Notably, according to the National Association of REALTORS®, the national existing home supply slipped to 6.1 months last month — very close to the 6.0-month marker which separates a “buyer’s market” from a “seller’s market”.
If supplies continue lower, home prices may rise more quickly than expected into 2013. Median home sale prices are already 9.5% higher as compared to one year ago.
This week, more housing data is set for release including the home value-tracking Case-Shiller Index and FHFA Home Price Index. Both are expected to show rising home prices as compared to the last recorded month, and one year ago. In addition, the National Association of REALTORS® releases its Pending Home Sales Index.
Lastly, and likely most important to mortgage rates and home affordability in Worcester County area , the government releases its Personal Consumption Expenditures (PCE) report Friday. PCE is the Federal Reserve’s preferred inflation gauge. An unexpected increase is expected to move mortgage rates higher.
Sep 21, 2012 | Mortgage Rates
For the first time in 9 weeks, mortgage rates have made new lows.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage rate fell 6 basis points to 3.49% this week, tying the all-time low set in late-July. The 15-year fixed rate mortgage also dropped, moving to 2.77%. This, too, marks an all-time low.
The Federal Reserve’s plan to pressure mortgage rates down may be working.
However, depending on where you live, your access to these all-time rates may be limited. This is because the Freddie Mac “published rate” is a national average based on the government-backed group’s survey of more 125 banks.
Mortgage rates can vary by region.
For example, this week, mortgage applicants in the West Region are most likely to get the lowest rates of anyone.
In the West Region, 30-year fixed rate mortgage rates are averaging 3.43 percent with an accompanying 0.6 discount points. By contrast, applicants in the Southeast Region are most likely to get the highest rates with the 30-year fixed rate mortgage is averaging 3.53% with an accompanying 0.7 discount points.
1 discount point is a fee equal to one percent of your loan size. Loans with more accompanying discount points pay higher total closing costs.
This week’s record-low rates are a boon to home affordability and, as compared to last September, mortgage rates are much improved :
- September 2011 : Average rate of 4.09%
- September 2012 : Average rate of 3.49%
Over the past 12 months, this 60-basis point mortgage rate improvement has increased the maximum purchase price of a Worcester County area home buyer by roughly 7%. Home prices, however, may soon catch up.
Earlier this week, the Census Bureau reported Housing Starts at a multi-year high and the Existing Home Sales report from the National Association of REALTORS® showed the same. Housing is in recovery and prices are on an upward trajectory.
Take advantage of low mortgage rates while they last. Talk to your loan officer today.
