Mortgage News in the Carolinas
Posts tagged Eurozone
What’s Ahead For Mortgage Rates This Week : December 12, 2011
0160 days
by Geoff Brown
in Mortgage Rates
Mortgage markets were mostly unchanged for the 6th consecutive week last week as Wall Street’s uncertainty regarding the future of U.S. and global economies remain.
Mortgage bonds made gains made through the early part of the week, which caused mortgage rates in Carolinas to drop Monday through Wednesday afternoon. Those gains were erased, however, as 23 of 27 Euro leaders reached agreement on fiscal coordination and budget planning, sparking optimism for the future of the Eurozone, in general.
Mortgage rates rose Thursday and Friday.
This week, the momentum may continue. The main story we’ll be watching is the Federal Open Market Committee’s Tuesday meeting — its 8th scheduled meeting of the year and its last until 2012.
When the Fed meets, mortgage rates are often volatile.
At its meeting, the FOMC is expected to vote the Fed Funds Rate unchanged within its current range near zero percent. However, it won’t be the Fed’s vote on the Fed Funds Rate that changes markets. Wall Street is keyed in to two other elements, instead.
The first element is the verbiage of the FOMC’s press release to markets. Issued upon adjournment, the FOMC’s press release identifies strengths and weaknesses in the U.S. economy, and offers an outlook for the future plus potential threats. The “tone” of the press release can change how mortgage bonds trade.
If the Fed describes an economy in recovery with few threat to growth, mortgage rates are likely to rise post-FOMC. By contrast, if the Fed says the economy has slowed, mortgage rates should fall.
The second element on which Wall Street is focused is the likelihood of new, Fed-led economic stimulus. Should the Federal Reserve modify existing support programs, or introduce new ones, mortgage rates are sure to shift. Unfortunately, we can’t know in which direction — it will depend on the size of the program and its expected impact on the U.S. economy.
The Fed adjourns Tuesday at 2:15 PM ET.
Beyond the Fed, there is other rate-moving news, too, including Tuesday’s Retail Sales report, Thursday’s Producer Price Index, and Friday’s Consumer Price Index. Each has the capacity to change mortgage rates throughout Charlotte so if you’re floating a mortgage rate, it may be a good time to lock one in.
Freddie Mac reports the average 30-year fixed rate mortgage at 3.99% with 0.7 discount points, plus closing costs.
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.
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.
