Providing
Useful Information, Advice, Education and a Fair Honest Deal on your Mortgage
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Providing
Useful Information, Advice, Education and a Fair Honest Deal on your Mortgage
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 Which has more force, Mother Nature or the Fed?..... September 22 FOMC ups rates to 3.75%, says Katrina could fuel inflation ..... September 20 The Week in Review..... September 18 |
The Week in Review..... September 18 10:48 AM EST Next Week will be filled with Fed speak and the results of Tuesday's announcement of whether the Fed has continued on their measured pace of raising rates another 1/4%. As for last week leading up to the Fed meeting, there were no great surprises that would alter another move by the Fed and according to leading economists, there is over an 85% chance that the Fed will continue their rate increases. This left us with a situation where the 10 year Treasury Bond yield has steadily moved above the 4.25% mark as investors have priced in this raise in short term rates. In response, 30 year fixed rate mortgages went up approximately 1/8% from Friday September 9th to Friday September 16th. In dollar terms, it will cost you about 1/2 point to get the same rate that you would have gotten for no points one week ago. In a look back at history, rates from the end of September to the end of December traditonally rise, and this year appears to be headed the same direction as we head into the 4th quarter of 2005. As congress gets a handle on how they intend to rebuild New Orleans and how they pay for it, you can expect that either tax rates will rise or else the deficit will rise and either way this will likely result in higher mortgage rates over the next 3 months. Here at Daily Interest, a close eye will certainly be kept on how this spending will affect the mortgage market. As for the past week, we had our first peek at numbers from post Katrina, although most of the data after the storm was limited to the umemployment numbers showing the greatest increase in unemployment claims in many years as an additional 70,000 people sought unemployment assistance last week. While fully expected, this number will surely grow over the coming month as more people come to the realization that their jobs will not reappear soon. In response, consumer confidence also took a drop. Confidence obviously dropped from the total lack of coordination after the storm. While I certainly do my best to just report the facts and keep an eye on how events affect mortgage rates in the states I do business, I find it hard to believe that there has not been more insistence on finding out what Florida did right last year compared to what was not done correctly this year. Instead of pointing fingers and trying to determine blame, can't these politicians just figure out how to do it better next time? Have a great day.......... Updated Forecasts 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. Stay tuned! See you tomorrow! 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
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