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 |
Which has more force, Mother Nature or the Fed?..... September 22 5:14 PM EST After Tuesday's rate hike by the Fed, we saw a slight worsening of the market and mortgage rates with the development of another hurricane poised to hit the Gulf Coast. Money from investors moved into the bond market for safety until the result of this storm is known. Investor's often move money from the stock market into the bond market in times of uncertainty. So, for now, we see some improvement in the market and mortgage rates as we move into this weekend. As for today's movements in the market, we have seen improvement as we learn that mother nature is stronger than the fed (in the short term!) and is on the minds of many investor's as another hurricane approaches the gulf coast. It seems that everyone has learned a lesson from New Orleans and is attempting to leave the Houston area early, yet the damage to the oil refineries in the Houston area could have a detrimental effect on our gasoline prices. These higher prices will transfer into inflation eventually and drive up mortgage rates. Therefore, in the long term and as early as next week, higher mortgage rates are probably on the horizon. On another storm related note, unemployment claims rose again this week as more of the displaced Katrina survivors have applied for assistance from the government as they attempt to put their lives back together. This news is being largely ignored by the market as it has little to do with details that will have a direct impact on mortgage rates. Mortgage Applications and Rates rise in last week Mortgage applications rose 1.5% driven by refinancings, in the last week, according to the Mortgage Bankers Association. The purchases index dropped -2.6% last week while the refinancing index jumped 7.0% from the previous drop of -6.7% tanked 11.4% following a 2.5% increase the previous week. Average 30-year rates rose to 5.81% from 5.72% the prior week. The average 15-year rate rose to 5.38% from 5.29% while 1-year adjustable rates advanced 12 basis points to 4.94% from 4.82%. 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 The September Fed Meeting You can read the Fed's statement on the Board of Governor's Federal Reserve website for yourself. For the 11th straight time, the Fed has increased the Federal funds rate, citing inflationary pressures from energy prices as the reasoning in raising rates one more time. The Fed did make a point of stating that in the long term, inflation was under control. 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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