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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 Here are the rest of the last week's comments....... 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 |
Higher Mortgage Rates on China Decision..... September 23 3:20 PM EST The market and your mortgage rates are going up today thanks to China. An anouncement from Beijing that they will bring their currency even more into the fold has sent shock waves through the bond market. You see, China currently is the second largest foreign holder of US Treasury Bonds. They have been buying a lot of bonds to keep down the value of the US dollar in comparison to the Chinese currency. With this development of allowing the Chinese currency to vary with the market, they will no longer need to artificially prop up the market. This has driven up mortgage rates about 1/8% on this initial announcement. In the short term we should not expect interest rates to rise substantially because the Chines are not going to sell off all their bonds. The effect that we WILL see is over the next few months. Over the past year or two, every time that interest rates started to move towards higher rates, the chinese have bought great amounts of bonds. If there is no longer a need to keep the dollar down, therefore making sure that the chinese can buy more american goods, we will simply see the higher rates stay high when they start to go up. At this time, we can likely assume that the predictions of the bulls about interest rates going up one percent in the next six months will very likely come true this time around. More on this as the new develops and certainly more on Hurrican Rita and whether this affects the market come Monday morning. As of this writing, it appears that the storm is going to go east of many of the refieries and, at least financially, save the price of gas from skyrocketing too quickly. 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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