Mortgage News in the Carolinas
Weekly Review
What’s Ahead For Mortgage Rates This Week : December 13, 2010
0524 days
by Geoff Brown
in Weekly Review
Mortgage markets worsened last week as the U.S. economy showed additional signs of strength; and global demand for mortgage bonds slipped.
Conforming mortgage rates rose in Carolinas and around the country for the fifth straight week. It’s a streak that’s been marked by volatile pricing that’s rendered rate shopping difficult.
Last week, lenders published as many as 5 rate sheets per day where, by comparison, over the past 12 months, lenders have averaged closer to 2 rate sheets per day.
This week, with a bevy of data set for release and a Federal Open Market Committee meeting, expect volatility to remain high. Wall Street remains undecided on the future of the U.S. economy and there will be plenty on information on which to trade:
- Tuesday : Producer Price Index, Retail Sales
- Wednesday : Consumer Price Index, Housing Market Index
- Thursday : Housing Starts, Initial and Continuing Jobless Claims
Despite the high impact of this week’s economic releases, though, it will be Tuesday’s FOMC meeting that sets the tone for the mortgage bond market and, consequently, for mortgage rates in Charlotte.
The Fed’s last meeting in early-November provided the spark to the recent rise in mortgage rates. In the group’s post-meeting press release, it acknowledged growth while committing $600 billion to bond markets. The move triggered a massive bond sell-off that has since pushed conforming mortgage rates to a 5-month high.
The Fed adjourns at 2:15 PM ET Tuesday afternoon.
If you’re still floating a mortgage rate or have otherwise yet to lock, consider executing a rate lock agreement early in the week. Once the Federal Open Market Committee adjourns, mortgage rates could spike again. And, although rates are up since November, they remain historically low.
What’s Ahead For Mortgage Rates This Week : November 22, 2010
0545 days
by Geoff Brown
in Weekly Review
Mortgage markets worsened last week as the U.S. dollar gave up ground in currency markets, and inflation concerns mounted. In response to the events, conforming mortgage rates in Carolinas rose for the third straight week.
Mortgage rates have now climbed by as much as half-percent since the start of the month, and Freddie Mac reports average loan fees to be higher, too.
The 7-month rally in rates may be nearing its end. The 30-year fixed rate mortgage is at a 4-month high after reaching an all-time low just 3 weeks ago.
The abrupt change in rates makes for an interesting study in expectations, and how they can influence a market.
Remember, inflation is bad for mortgage rates. Inflation devalues the dollar which, as a consequence, devalues repayments made to mortgage bond holders. As a result, when inflation is present, mortgage bonds tend to sell-off which causes mortgage rates to rise.
This is what’s been happening these past 3 weeks. However, we’re not in an inflationary environment. To the contrary:
- The Federal Reserve has said inflation is too low to be economically healthy
- Last week, the Cost of Living posted its lowest year-over-year gain in history
But mortgage rates are rising anyway. This is because global investors believe the Fed’s most recent market intervention — a $600 billion bond purchase program — will later lead to inflation. Just on the expectation, markets are behaving like inflation is already here.
This week is holiday-shortened, and rates should remain volatile. There’s a bevy of data including the Existing and New Home Sales reports, consumer confidence data, and the FOMC Minutes from the November 3 meeting.
If you haven’t locked a mortgage rate, consider locking one today. Rates have farther to climb than the fall.
What’s Ahead For Mortgage Rates This Week : November 15, 2010
0552 days
by Geoff Brown
in Weekly Review
In a holiday-shortened trading week, mortgage markets tanked last week, casting doubt on whether the bond market’s 7-month bull run will continue. Fears of inflation caused conforming mortgage rates to rise in Carolinas.
Last week marked the first sizable mortgage rate increase over the course of 7 days since April.
The biggest reason why rates rose last week was because of concerns that the Federal Reserve’s latest round of stimulus will devalue the U.S. dollar.
The Fed pledged an additional $600 billion to the bond markets two weeks ago and, to meet this obligation, the group will have to, quite literally, print new money.
It’s Supply and Demand. With more dollars in circulation, every existing dollar is worth less.
It’s also inflationary.
As the Fed’s pledge ties back to mortgage rates, remember that mortgage bondholders are paid in U.S. dollars. So, if those dollars are expected to be worth less in the future, we would expect mortgage bond demand to fall. And that’s exactly what happened last week — investors rarely clamor for assets whose value drops over time.
The falling demand dropped down prices, and pushed up yields. Mortgage rates spiked.
This week, the trend could continue. There’s a lot of inflation-signaling data on tap:
- Monday : Retail Sales
- Tuesday : Producer Price Index; Consumer Confidence; Housing Market Index
- Wednesday : Consumer Price Index; Housing Starts
- Thursday : Initial and Continuing Jobless Claims
Analysts are calling for lukewarm data this week; none of the releases is expected to show strong growth. If the analysts are wrong, look for rates to rise again.
Momentum is moving away from rate shoppers. If you’ve yet to lock in a rate, consider doing it now.
What’s Ahead For Mortgage Rates This Week : November 1, 2010
0566 days
by Geoff Brown
in Weekly Review
Mortgage markets remained highly volatile for the second straight week last week. Yet, over the course of 5 days, mortgage bonds ended the week relatively unchanged.
Conforming rates in Carolinas worsened Monday, Tuesday and Wednesday — rising as much as 3/8 percent as compared to the week prior — before settling lower through Thursday and Friday.
On the week overall, 30-year fixed rates worsened, 15-year fixed held steady, and 5-year ARMs improved.
And despite all the data released last week, it wasn’t the fundamentals that were causing rates to move. Instead, Wall Street was firmly focused on the Federal Reserve’s scheduled 2-day meeting this week; preoccupied with the likelihood of new Fed stimulus program.
The Fed’s meeting adjourns Wednesday and the group is widely expected to announce a new round of bond market support at that time. Uncertainty over how big that package will be, however, is what’s causing rates to jump.
Market estimates range from $250 billion to over $1 trillion and when Wall Street expectations shifts toward the lower end of that range, mortgage rates have been rising. When expectations shifts toward the upper range, mortgage rates have been falling.
This is why it’s all eyes on the Fed this week. Once the Fed adjourns, there’s no more “expectation” — there’s only Fed commitment.
Other than the Federal Reserve’s get-together, there isn’t much new data due for release. The week’s calendar looks like this:
- Monday : Personal Income and Spending reports
- Wednesday : FOMC adjourns from its 2-day meeting
- Thursday : Initial and continuing jobless claim data
- Friday : Pending Home Sales, Jobs Report, Unemployment Rate
It’s unlikely that data will swing mortgage rates until after the Fed’s Wednesday adjournment, but, once that happens, expect bond market attention to shift to the October jobs report set for 8:30 AM ET release Friday morning. If jobs data is strong, mortgage rates should rise.
All things considered, it’s dangerous to float a mortgage rate this week. If you’re not already locked, talk to your loan officer prior to Wednesday afternoon.
