Providing
Useful Information, Advice, Education and a Fair Honest Deal on your Mortgage
 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 |
December 1 11:29 AM EST There are 5 economic reports being released today, but the one that will have the most effect on mortgage rates is the Consumer Spending Report which was released earlier this morning. To this point, the market remains about the same as it was at the close of yesterday's trading indicating no changes in the rates. The initial response was a better market on the news of prices only rising 0.1% in October, but the more the market looked into the depths of this report the closer to unchanged we have come to unchanged. Freddie Mac reported that the average 30 yr mortgage rate dropped to 6.26% from 6.28% and the average 15 year fixed rate was unchanged at 5.81% Consumer Prices Looking at this news on Consumer Prices, this still indicates that inflation is well under wraps and this was a report many investors were paying very close attention to after the 0.9% increase we had seen last month. This number had basically been ignored as it was attributed to Katrina, but this report verifying the decision to ignore data is well received. Regardless, this still gives us a year to year increase in Consumer Prices of 3.3%, which leads me to this mornings take on rates and where they will be going. 3.3% is definitely above the Fed's revealed target of price increases in the 1% to 2% range. Consumer Spending is nearly 2/3 of the spending in the economy and this report shows us that there is definitely some inflationary pressures evident in the marketplace. Inflation means higher mortgage rates on the horizon. Not only does this number coming in above the Fed's target point toward more rate hikes in the future, this also has to continue to concern bond investors. Looking from this point of view, if you were a 10 year Treasury Bond investor and you could get back 4.5% on your investment, but knew that everythin you bought in your normal day spending had increased 3.3%, this means that what you have left in today's dollars is only a 1.17% profit. This is very tight. Since the increases in oil and gas prices in September began to hit (and were the first numbers to show us an annual increase over 3% in many months) we have seen Mortgage Rates for a 30 year fixed increase 5/8% and the bond market yield on a 10 year Treasury Bond go from 4% to 4.5% There is always the normal supply and demand in the marketplace, but investors will not buy bonds that yield them much less of a profit than 1 and a quarter percent. It will take 3 to 4 months of consumer prices increasing at only 0.1% to assure the market that there is price stability and as long as there is not any true certainty that prices and inflation are going up, rates should be fairly steady. Freddie Mac Mortgage Rate Survey 30-year fixed-rate mortgage average was down slightly in the week ending Thursday, falling to 6.26% from 6.28% a week ago, said Freddie Mac (FRE) . The mortgage agency said its weekly survey also showed the 15-year loan was unchanged at 5.81%, The five-year hybrid ARM increased as well, to 5.76% from 5.75%. and the one-year Treasury-indexed adjustable rate rose, to 5.16% from 5.14%. "Mortgage rates are in a holding pattern at the moment as financial markets try to discern where inflation and growth in the economy are headed," said Frank Nothaft, Freddie Mac chief economist, in a statement. "Until the market decides these issues, mortgage rates should stay within a relatively narrow band. Current low mortgage rates, coupled with the higher 2006 conforming loan limits of $417,000, should help to keep the mortgage industry bustling as we head into the new year." Later This Week This week still brings us the job report on friday. 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.
DailyInterest.com
- guide to Home Mortgage Loan Advice & Education for refinancing and
purchasing |
||||||||||||||||||||||
