Mortgage News in the Carolinas
Mortgage Rates
What’s Ahead For Mortgage Rates This Week : October 24, 2011
0209 days
by Geoff Brown
in Mortgage Rates
Mortgage markets improved last week on worries that Eurozone leaders would decline to send aid to Greece. These concerns overshadowed optimism for the U.S. economy, the result of several strong data points.
Conforming rates across Carolinas eased, giving homeowners and rate shoppers yet another chance to nab historically-low mortgage rates. FHA mortgage rates remained low, too.
According to Freddie Mac, the average 30-year fixed rate mortgage rate is now 4.11% with 0.8 discount points. For loans with zero points, expect to pay slightly higher rates.
Rate-shoppers and home buyers would do well to pay attention.
This week’s may be as good as mortgage rates get. Possibly forever. This is because the market conditions that helped rates stay low — a weak U.S. economy and uncertainty in Europe — are eroding.
The U.S. economy has posted strong jobs, spending, and confidence figures in the past 3 weeks and Eurozone leaders appear closing making a deal that will help Greece avoid a sovereign debt default.
Once markets no longer worry about these two events, rates are expected to surge.
Eurozone leads met all weekend and have chosen Wednesday, October 26, as a likely “decision date” for Greece. If that date holds, and if an agreement can be reached, U.S. mortgage bonds will sell-off and mortgage rates will rise.
The housing sector is set to release important news this week, too.
After last month’s increase in Housing Starts and steady Existing Home Sales report, Wall Street will watch for this week’s New Home Sales, Case-Shiller Index and Pending Home Sales Index. If momentum stays strong for housing, that, too, should pressure mortgage rates higher.
Mortgage rates remain near all-time lows. If you’ve yet to lock your mortgage rate, or are still shopping, consider that rates have more room to rise than to fall. The “safe play” is to execute a lock today.
What’s Ahead For Mortgage Rates This Week : October 11, 2011
0221 days
by Geoff Brown
in Mortgage Rates
Mortgage markets worsened last week as safe haven buying eased and demand for mortgage-backed bonds dropped. As in most weeks since March 2011, Greece and U.S. jobs dictated market direction.
Conforming mortgage rates in Carolinas rose last week, lifting rates off their all-time lows and causing consternation among the nation’s would-be buyers and refinancers.
Last week’s action may surprise you. After all, Freddie Mac’s weekly mortgage rate survey said average, 30-year fixed rate mortgages had dipped, dropping to 3.94% — the first time the average rate reported sub-4 percent.
A keen eye, however, revealed the another truth.
Yes, the average 30-year fixed rate mortgage did go sub-4 percent, but, in order to get those rates, applicants were suddenly required to pay 0.8 “discount points”. This is an increase of 0.1 discount points from the week prior, a change in loan cost thatr reduces the benefit of falling mortgage rates.
1 discount point is equal to 1 percent of your loan size.
All of that is history now, however,. Rates climbed each day last week and are now at their pre-Labor Day levels. The Refi Boom may not be over, but it may be stalled.
This week, mortgage rates may continue to climb. There is talk within the Eurozone that Germany and France will come to Greece’s aid, and that a plan will be solidified prior to November 3. This would boost stock markets at the expense of bonds, leading to higher mortgage rates.
In addition, last week’s strong employment data has renewed speculation that the U.S. economy is, in fact, healthy so analysts are now watching for Friday’s Retail Sales data.
Because consumer spending is an economic catalyst, if Retail Sales shows strength, mortgage rates should rise.
And, lastly, there is a 10-year Treasury auction Wednesday. Mortgage bonds don’t mirror the treasuries, but when demand is strong for treasuries, it’s often strong for mortgage-backed bonds, too. Therefore, a strong auction of government debt will help hold mortgage rates down.
A weak auction should lead rates higher.
Adjustable-Rate Mortgages Starting To Adjust Higher
0250 days
by Geoff Brown
in Mortgage Rates
For the first time in a year, homeowners with adjusting mortgages are facing rising mortgage rates. The interest rate by which many adjustable-rate mortgages adjust has climbed to its highest level since September 2010, and looks poised to reach higher.
This is because of the formula by which adjustable-rate mortgage adjust.
Each year, when due for a reset, an adjustable-rate mortgage’s rate changes to the sum of fixed number known as a “margin”, and a variable figure known as an “index”. For conforming mortgages, the margin is typically set to 2.250 percent; the index is often equal to the 12-month LIBOR.
LIBOR stands for the London Interbank Offered Rate. It’s a rate at which banks lend to each other overnight.
Expressed as a math formula, the adjusting ARM formula reads :
(New Mortgage Rate) = (2.250 percent) + (Current 1-Year LIBOR)
LIBOR has been rising lately, which explains why ARMs are adjusting higher as compared to earlier this year. There has been considerable stress on the financial sector and LIBOR reflects the uncertainty that bankers feel for the sector.
LIBOR last spiked after the collapse of Lehman Brothers in 2008 amid global financial fears. Analysts expect LIBOR to rise into 2012 because of bubbling concerns in the Eurozone.
Despite LIBOR’s rise, though, most adjusting, conforming ARMs are still resetting near 3 percent. For this reason, homeowners with ARMs in Carolinas may want to consider letting their respective loans adjust with the market.
This is because an adjusting mortgage rate near 3 percent may be better than what’s available with a “fresh loan” — even as 5-year ARMs rates make new all-time lows. Unlike a straight refinance to lower rates, an adjusting loan requires no closing costs, requires no appraisal, and requires no verifications.
So, if you have an adjustable-rate mortgage that’s set to reset this season, don’t rush to refinance it. Talk to your lender and uncover your options. Your best course of action may be to stay the course.
What’s Ahead For Mortgage Rates This Week : September 6, 2011
0257 days
by Geoff Brown
in Mortgage Rates
Rates were especially volatile, too, with the long Labor Day Weekend looming.
Overall, conforming mortgage rates in Carolinas improved for the first time in 3 weeks. On a product-by-product basis, though, mortgage rates are faring differently.
According to the Freddie Mac weekly mortgage rate survey, last week, the 30-year fixed rate mortgage was unchanged but the 15-year fixed rate mortgage and the 5-year ARM fell.
The 5-year ARM is at a new all-time low for qualified borrowers.
A drop in 5-year ARM rates throughout Charlotte without a corresponding drop in 30-year fixed mortgage rates signals that markets expect the economy to stabilize over the long-term but with weakness in the near-term. The 5-year ARM’s ultra-low rates suggests marked weakness ahead.
The 5-year ARM may get another boost this week, too.
While U.S. markets were closed for Labor Day, Eurozone nations were hit with new wave of sovereign debt concern, this time centered on Italy. Greece, Portugal and Ireland have already been the subject of debt default debate this year. Italy’s inclusion hit equity market hard and safe-haven buying re-commenced.
This should give a good start to mortgage rates this week. Look for rates to start lower. That’s not to say, however, that they’ll finish the week lower. With very little economic data due for release, markets will move on momentum and momentum can change in a flash.
The two biggest potential market movers both come Thursday. Fed Chairman Ben Bernanke speaks in Minnesota at 1:00 PM, and United States President Barack Obama addresses the nation at 7:00 PM. Both speeches are highly anticipated and should cause markets to move.
