Mortgage News in the Carolinas
Posts tagged Inflation
What’s Ahead For Mortgage Rates This Week : June 13, 2011
0239 days
by Geoff Brown
in Mortgage Rates
Mortgage markets moved in feverish fashion last week, changing with extreme frequency, and eventually ending slightly worse on the week. Conforming mortgage fell last week but, by Friday, they had retreated higher.
Last week marked just the second time in 10 weeks that rates in Charlotte increased. During that span, Freddie Mac reports that mortgage rates have dropped 42 basis points, or 0.42%.
That equates to a monthly savings of $25.24 per $100,000 borrowed.
One reason why mortgage rates have been dropping is that the economy is growing more slowly than projected. In a speech last week, Federal Reserve Chairman Ben Bernanke described the U.S. recovery as “frustratingly slow”. In a separate speech, another Federal Reserve President, William Dudley, categorized the recovery as “subpar”.
Economic weakness tends to promote a low mortgage rate environment as equity markets sell off and investors seek safety of principal. Indeed, the Dow Jones Industrial Average fell for the 6th straight week, its longest losing streak since 2002.
Mortgage rates were also helped by ongoing uncertainty in Greece. The nation remains at-risk for default, and that’s spurring a bond market to flight-to-quality which benefits the U.S. mortgage market, too.
This week, mortgage rates may reverse their recent slide. There isn’t much data due for release, but the numbers that will hit the wires have the ability to move markets — especially the inflation-linked figures.
- Tuesday : Producer Price Index, Retail Sales
- Wednesday : Consumer Price Index
- Thursday : Housing Starts
- Friday : Consumer Sentiment
If you’ve been looking at mortgage rates for a purchase or refinance, now may be a good time to lock. FHA and conforming rates are at their lowest levels since December 2010.
Going forward, rates have much more room to rise than to fall.
Job Growth Returning To “Normal” Levels — A Bad Sign For Mortgage Rates
0278 days
by Geoff Brown
in The Economy
Be prepared for Friday morning. Mortgage rates and home affordability could worsen quickly. At 8:30 AM ET, the Bureau of Labor Statistics releases its April Non-Farm Payrolls report and momentum has been strong.
The monthly jobs report is a market-mover and analysts expect that 196,000 new jobs were added last month. If those expectations are exceeded — by even a little — Wall Street would take it mean “economic strength” and the stock market would be boosted.
Too bad for rate shoppers, though; a move like that would also lead to higher mortgage rates throughout Carolinas. This is because, coming out of a recession, reports of economic strength tend to push mortgage rates up. We’ve seen it happen multiple times in the last 8 months.
Since losing more than 7 million jobs between 2008 and 2009, employers have added 1.3 million jobs back to the economy. And we’re learning that there’s plans for fewer job cuts in the future. It’s clear that the jobs market is improving and this is why tomorrow’s Non-Farm Payrolls report is so important.
A “weak economy” helped keep mortgage rates low for a very long time. A strengthening economy will reverse that tide.
So, consider your personal risk tolerance today, in advance of tomorrow’s Non-Farm Payrolls report. If the thought of rising mortgage rates makes you nervous, call your loan officer and lock in a rate today. Once tomorrow’s data is released, after all, the market might look changed.
What’s Ahead For Mortgage Rates This Week : April 11, 2011
0302 days
by Geoff Brown
in Mortgage Rates
Mortgage markets worsened last week as energy costs remained high, and jobs data looked strong. The safe haven buying that characterized the March mortgage market has subsided.
it’s driving mortgage rates higher across Carolinas.
Conforming and FHA mortgage rates rolled back 8 weeks worth of improvements last week and are now back to mid-February levels. The rise in rates is hurting refinance activity and home affordability.
The biggest story from last week figures to carry forward into this one — the Federal Reserve’s take on inflation.
In the minutes from its March meeting, the FOMC was shown to have discussed the possibility of raising the Fed Funds Rate ahead of schedule, and to be watching near-inflation closely. Both developments are in response to a growing economy with rising price pressures.
Mortgage rate shoppers should take note.
Inflation is a mortgage-rate killer. When inflation is present in the economy, all things equal, mortgage rates rise. Sometimes by a lot. And, usually, just the expectation of inflation is all it takes to make mortgage rates jump.
That’s what we saw last week.
This week, keep a close watch on new inflation-related data set for release. This includes Tuesday’s Retail Sales data, Wednesday’s Producer Price Index, and Thursday’s Consumer Price Index. Each release can potentially move mortgage rates although, if recent trends are an indication, expect for rates to rise.
Mortgage rates in Charlotte remain historically low. If you’re shopping for a mortgage, consider locking as soon as you can.
A Simple Explanation Of The Federal Reserve Statement (March 15, 2011 Edition)
0329 days
by Geoff Brown
in FOMC
Today, for the second straight meeting, the Federal Open Market Committee voted unanimously to leave the Fed Funds Rate unchanged within its target range of 0.000-0.250 percent.
The vote was 10-0.
In its press release, the FOMC noted that since its January 2011 meeting, the economic recovery “is on firming footing”, and that the labor markets are “improving gradually”. In addition, household spending “continues to expand”. Nonetheless, the Fed said, the economy remains constrained by rising commodity prices and the “depressed” housing sector.
The FOMC statement also re-affirms the group’s plan to keep the Fed Funds Rate near zero percent “for an extended period”, and to keep its $600 billion bond market support package — more commonly called “QE2″ — intact.
And, lastly, for the third straight time, the Federal Open Market Committee’s post-meeting release statement included a paragraph detailing the Federal Reserve’s dual mandate of managing inflation levels, and fostering maximum employment. Although it acknowledged inflationary pressures on the economy, the Fed said inflation remains too low for the economy currently, and that unemployment remains “elevated”.
In time, the Fed expects both measurements to improve.
Mortgage market reaction to the FOMC has been negative since the statement’s release. Mortgage rates in Charlotte are unchanged, but poised to worsen.
The FOMC’s next scheduled meeting is a 1-day event, March 15, 2011.
