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 Here are the rest of the last week's comments and the days that affected rates most lately....... Consumer Confidence jumps higher, New Home Sales up 13%.... November 29 Market Drops on Home Sales Figures.... November 28 Holiday Week is uneventful.... November 22 9 weeks in a row with higher rates..... The week in review November 14 Time to Refinance that ARM?..... The week in review November 7 The Week in Review..... Highest Rates since 7/1/2004 October 24 PPI follows the lead of last week's CPI with highest reading in 25 years..... October 18 Greenspan worries about "exotic" mortgage instruments..... September 26 |
November 29 2:54 PM EST Two economic reports were released today and both pointed to higher mortgage rates, not only taking back the gains that were made yesterday on the market, but adding back even more. These gains have erased all the gains made during the last week in one fell swoop. Consumer Confidence was reported today with the largest increase in two years as the index went from 85.2 in October to 98.9 in November, an increase of 13.7 points. New Home Sales had an increase of 13%, which was the largest monthly increase since 1993 and with sales at a 1.42 million annually rate this is the highest pace for home sales since they started keeping track of this statistic. All well and good, but what does this do to my mortgage rate, you ask? Well, if you are in a position to do so, lock in the rate before it goes higher. This development has already made us not look at rates possibly dipping 1/8% to banks across the board releasing 2nd rate sheets with 1/8% higher rates this afternoon. Why, and how, did these reports affect rates? The market seems itching to move higher rather than moving lower and any report at all of good economic news will point us toward higher rates. This is especially true when it comes to the areas of home sales and consumer confidence. When it comes to Consumer Confidence, good readings in November generally means that the consumer is ready to do some holiday spending and will not be holding on to their purse strings quite so tightly as they look at their list and are checking it twice. On the front of the new home sales, it was only a day before that we saw the situation of lower existing home sales in large numbers. With big numbers on the new homes side of the equation, this means that the two reports mostly cancelled each other out. The Consumer will certainly be the focus for the next two weeks. We are already hearing better numbers coming in for online sales, some as high as 30% higher than they were just a year ago. This is good news for the economy as so many business live and die with what business they can do over the next 3 weeks. This preview of the news with the confidence report from November combined with this preliminary news from holiday sales has given us higher rates today. Later This Week This week still brings us the PMI report tomorrow, consumer spending for November on Thursday and the job report on friday. Given the predictions by experts, we could very well see 3 more days of slipping rates. With the drop in oil prices, consumers have not held back on spending as much as originally thought and November is the start of the holiday shopping season. If you are trying to decide whether to lock in a rate or even to do a loan. Do not wait too long, rates are likely going nowhere but higher for the next 4 weeks. Have a great day..........Scott This Week's Economic Reports
Updated Forecasts 2006 forecasts coming the first week of December! This continuing trend of higher and higher rates has caused me to change the rate lock advisory to lock for all four stages. In addition, I have updated my forecast to show rising rates for the second half of 2005. This is a combination of what we have seen in both the market and the economic reports over the last 3 months and the continued tendencies of the market to shoot higher of very little good news. Now, on the bright side, the global economy is still going nowhere. We have quite a quandary where if the market does not rise in response to continued increases by the Fed we could see an inverted rate curve due to the global pressures. This is still a very good possibility and should we see anything close to an inversion, rates could drop quickly. The very high number of mortgages that are ARM's vs Fixed rates would switch in a heartbeat if you can get a 30 year fixed at a lower rate than a 5 year ARM!! If this fine line were to get crossed, you can throw all the forecasts of higher rates right out the window. Where are rates headed in the next 3 months? It looks like the trend will be heading steady or higher with new projections out and the higher oil prices and Fed rate increases driving rates over the next 3 months Where are rates going this year? The entire first part of the year, I have been sticking with the experts position that for the year of 2005, we can expect to see mortgage rates to level out in the 6.5% to 6.75% range for a 30 year fixed rate mortgage by the end of the year. Although this forecast has been the same for the last 3 years and has yet to materialize, this long term forecast must be still taken into account. My personal expectations are that 30 year rates will be rising for the second half of 2005 barring any more terrorist attacks. If I were financing/refinancing a home . . . . I would Lock if my closing was within 10 days I would Lock if my closing was 11- 30 days away I would Lock if my closing was 31 - 45 days away I would Lock if my closing was more than 45 days away *As always, this commentary is only my personal opinion if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any/all other borrowers.
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