Archive for the ‘Weekly Review’ Category

What’s Ahead For Mortgage Rates This Week : March 8, 2010

Monday, March 8th, 2010

Non-Farm Payrolls Mar 2008-Feb 2010Mortgage markets improved last week in low-volume trading.

Between Monday to Thursday, Wall Street focused on the upcoming jobs reports and mortgage markets gained while traders jockeyed for position. Mortgage rates drifted lower through Thursday afternoon. But, then, after a better-than-expected Non-Farm Payrolls report Friday morning, mortgage markets — and mortgage rates — reversed.

Overall, mortgage rates dropped last week, but only by a small margin. Rates were best Thursday afternoon.

It was the second consecutive week in which mortgage rates fell.

Last week was also interesting in that both stock markets and bond markets improved, proving that rates don’t always rise when stock prices do. 455 of the S&P 500 companies posted gains last week.

If you’re shopping for a home or a refinance, though, don’t rest on your laurels. After Friday’s big sell-off, this week opens into a major headwind and, plus, the Federal Reserve’s support for mortgage markets ends in just 3 weeks.

This week, without much data to influence traders, the upward momentum in rates may have little cause to temper. We’ll see the Consumer Confidence numbers on Tuesday and Retail Sales on Friday.  Beyond that, there’s not much else.

After last week’s performance, conforming mortgage rates in california may be poised to rise rather sharply. If you’re waiting for the right time to lock your rate, it may have been this past Thursday. Consider locking your rate early this week to protect against further rate hikes.

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What’s Ahead For Mortgage Rates This Week : March 1, 2010

Monday, March 1st, 2010

Non-Farm Payrolls Feb 2008-Jan 2010Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat.

Mortgage rates are now at their lowest levels since early-February.

Last week was heavy on negative data:

In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector.

The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy.

Bernanke stayed on message — the Fed Funds Rate will stay low for an extended period of time.

Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall.

This week, mortgage rates will jockey around Friday’s Non-Farm Payrolls report.

Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February.  If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it’s worse, rates will rise.

Other important data this week include Personal Consumption Expenditures — the Fed’s preferred inflation gauge — plus the Fed’s Beige Book release.  Mortgage rates remain in flux so float with caution.

Mortgage rates look good today, but by Friday, they could be much, much worse.

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What’s Ahead For Mortgage Rates This Week : February 22, 2010

Monday, February 22nd, 2010

New Home Sales Dec 2008-Dec 2009Mortgage markets had a terrible, holiday-shortened week last week as Wall Street responded to worse-than-expected inflation data and action from the Federal Reserve.  Mortgage bonds sold off with force, causing mortgage rates to rise for the second week in a row.

Last week was a bad week to float a mortgage, to say the least. Rates in los angeles rose by the largest margin in any week since late-2009.

The two biggest stories from last week both came from the Federal Reserve.  The first was the release of the FOMC January meeting minutes which showed more confidence in the U.S. economy than Wall Street expected, and the second was the Fed’s surprise announcement to raise the nation’s Discount Rate to 0.75%. Both sparked risk-taking on Wall Street and bonds sold-off as a result. 

Now, the Fed Funds Rate won’t climb anytime soon and neither will Prime Rate, but the Fed has sent a clear message to the markets — The Era of Loose Monetary Policy is over.

This week, there’s a lot of economic data set for release.

  • Tuesday : Case-Shiller Home Price Index, Consumer Confidence
  • Wednesday : New Home Sales
  • Thursday : FHFA Home Price Index, Initial Jobless Claims
  • Friday : Existing Home Sales, Personal Consumption Expenditures

With markets already on edge, any better-than-expected results should be bad for mortgage rates.

After last week’s performance, conforming mortgage rates for residents of illinois have now unwound most their January gains.  If you’re waiting for the right time to lock, it may have been 2 weeks ago. Consider locking in this week to protect against any further deterioration in price.

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What’s Ahead For Mortgage Rates This Week : February 16, 2010

Tuesday, February 16th, 2010

Housing Starts Jan 2008-Dec 2009Mortgage markets worsened last week on general profit-taking in the U.S. bond market, combined with talk of a coordinated rescue effort for Greece and its debt burden. Mortgage-backed bonds sold off, causing conventional and FHA mortgage rates to rise.

There wasn’t much hard data on which to trade last week, either, so momentum took markets farther than they otherwise might have moved on their own.  It marked the first time in 5 weeks that rates rose for california rate shoppers.

This week, data returns. Expect mortgage market movement.

Some of the week’s more important releases include:

  1. Housing Starts and Building Permits (Wednesday)
  2. The release of the last month’s FOMC Minutes (Wednesday)
  3. Business and consumer inflation figures (Thursday and Friday)

Inclement weather may have impacted last month’s Housing Starts reading so pay closer attention to Building Permits.  Permits precede actual construction and can be more indicative of economic optimism. If permit readings are strong, it should be a negative for mortgage rates.

The same is true for the FOMC Minutes. 

Last month’s FOMC post-meeting press-release was decidedly middle-of-the-road, but the statement is just a summary of the Fed’s 2-day meeting, boiled down to a few paragraphs.  Wednesday’s release of the FOMC Minutes will reveal the deeper discussions among members of the Fed.  Wall Street will mine it for clues about the future of the economy.

If Wall Street senses optimism coming from the Fed — again — mortgage rates should rise.

And, lastly, keep an eye on Thursday and Friday’s inflation data.  Inflation is bad for mortgage rates so a higher-than-expected reading should spark a bond market sell-off.

Since mid-December, mortgage rates have moved within a tight range and there’s little reason for rates will break this range this week. However, we are near the top of the channel. If you know you’re going to need a rate locked soon, it’s probably best to do early in the week.

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What’s Ahead For Mortgage Rates This Week : February 8, 2010

Monday, February 8th, 2010

Non-Farm Payrolls Net New Jobs Feb 2008-Jan 2010Mortgage markets improved last week on domestic jobs data and international banking concerns. The news triggered buying in the bond market and, as a result, conventional, FHA and VA mortgage rates in illinois improved for the 4th consecutive week.

Mortgage rates are now at a 6-week low but probably shouldn’t be.  It underscores just how important global events can be to U.S. mortgage markets.

For example, corporate earnings continue to improve and key elements of the economy are strengthening.  Even the Federal Reserve acknowledges this.  In most circumstances, that would be a boon for the stock markets and bond markets would suffer, including mortgage bonds.

Last week, that wasn’t the case.

Early in the week, as (1) China tightened its monetary policy, (2) Greece did little to quell lingering default fears, and (3) Spain raised its deficit forecasts, global investors sought to reduce their collective risk exposure. For safety of principal, many sold some of their more aggressive positions and moved the cash proceeds into the U.S. bond market — which includes mortgage bonds. 

On Wall Street, this type of trading pattern is called a “flight-to-quality”.  Because mortgage bonds are backed by U.S. government entities, the debt is considered to be ultra-safe.  Last week’s extra demand for bonds helped to push prices up and mortgage rates down.

And that was before Friday’s weak jobs report. Although the Unemployment Rate fell to 9.7%, the government reported a net loss of 98,000 jobs last month and this, too, helped mortgage rates tick lower.

This week, we’ll hope for momentum to continue.

There’s very little domestic news to move rates this week so keep an eye on the global market for similar stories like what we saw last week.  Or, if you’re not sure what to look for, just give me a call or send me an email and I’ll be happy to watch the markets and mortgage rates for you.Post

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What’s Ahead For Mortgage Rates This Week : February 1, 2010

Monday, February 1st, 2010

Non-Farm Payrolls Net New Jobs Jan 2008-Dec 2009In a news-heavy week, mortgage markets improved last week, adding to a 3-week rally.

But, given last week’s data and domestic story lines, it’s surprising that rates actually fell.

  1. The Federal Reserve said the economy continues to strengthen
  2. Consumer Confidence pushed to a 2-year high
  3. 4th Quarter domestic output exceeded Wall Street’s expectations

Usually, events like these draw money away from the bond markets and into the stock markets and Wall Street preps for better corporate earnings. The movement pressures mortgage rates to rise.

Last week, however, different stories trumped the headlines including a report from Standard & Poor’s that said U.K. banks are no longer counted among the world’s most stable.  This research, in particular, triggered a flight-to-quality among investors that pumped the U.S. dollar and sparked new demand for mortgage bonds.

It’s one reason why we ended the week on a rally and it just goes to show how unpredictable mortgage rates can be.

This week figures to be a challenge, too.

First, we start the week with key inflation data.  When inflation runs hot, it’s usually bad for mortgage rates.  Inflation is expected to be tame, however — a point the Fed made several times in its press release last week.  That said, inflation data is closely watched by markets and can make a big impact on rates.

Then, on Wednesday, ADP releases its private sector job report.  The ADP data is a precursor to the government’s own Non-Farm Payrolls report which is due to hit Friday.  ADP is expected to show a net loss of roughly 85,000 jobs.  Depending on where the actual numbers comes in, mortgage rates could wiggle a bit.

If the ADP report shows much fewer than 85,000 jobs lost, expect mortgage rates to rise.  The same is true for Friday’s job report.  A miss on expectations will cause mortgage to ratchet higher.

Since peaking on the last day of December, mortgage rates took a slow, steady descent through January. They’ve have taken back close to two-thirds of December’s overall losses.  This week, rates could fall some more, or they could bounce back up.  The most prudent time to lock would be prior to Tuesday’s closing. 

After that, the respective jobs reports will take over and rates could go either way with force.

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What’s Ahead For Mortgage Rates This Week : January 19, 2010

Tuesday, January 19th, 2010

Inflation squeezes mortgage ratesMortgage markets showed little conviction last week, carving out just a narrow trading channel. There was very little data on which for markets to move, leaving mortgage rates momentum-bound.

Luckily for rate shoppers, mortgage rate momentum was favorable. Rates were slightly lower Monday through Thursday before breaking downward Friday afternoon. Home shoppers in manhattan this past weekend caught a nice break.

Last week marked the second straight week in which mortgage rates fell.

This week, in holiday-shortened trading and with little economic data set for release, expect mortgage rates to again move on momentum. The biggest report of the week is Wednesday’s Producer Price Index.

Producer Price Index is important to mortgage rates because of its role in inflation.  PPI is akin to a Cost of Living-type measurement, but for business.  As business costs rise, the thought goes, it’s not long before consumer costs rise, too. Businesses eventually pass on costs, after all.

In this manner, a rising Producer Price Index can foreshadow rising consumer prices, and, therefore, inflation.

Inflation is awful for mortgage rates.

PPI expectations have revised downward this month, especially because last week’s data showed a deceleration in consumer prices nationwide. If PPI isn’t as weak as expected, mortgage rates will rise.

Other influential data this week includes Housing Starts, Consumer Confidence and Initial Jobless Claims.

So far, 2010 has been for mortgage rates in new york and around the country. If you’re in need of a rate lock, this week may be a good time to take one.

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What’s Ahead For Mortgage Rates This Week : January 11, 2010

Monday, January 11th, 2010

Retail Sales data shapes mortgage ratesData was sparse through 2010’s first trading week last week, setting the stage for a week of momentum trading.

In up-and-down trading, mortgage pricing improved overall but the best rates of the week didn’t last long.

Rates improved Monday and Tuesday as an oversold market corrected itself to better price points.  Then, in anticipation of the December jobs report, rates worsened Wednesday and Thursday.  Friday, after the jobs report was released, pricing proceeded to carve out a huge range before settling unchanged.

On average, lenders issued new rate sheets every few hours last week. It was a difficult week to shop for mortgages in illinois and elsewhere.

Unfortunately, this week doesn’t figure to be much better. 

For the second straight week, the economic calendar is bare.  Traders — like last week — will be forced to rely on “gut feel” to make their trades.  That rarely bodes well for shoppers.  Especially because traders are facing a mortgage market in the midst of a terrible losing streak. 

Since reaching an all-time low December 1, 2009, 30-year fixed rate mortgages have worsened by 300 basis points, or 3 percent.

To a homeowner or rate shopper in new york , the math of 300 basis points looks like this:

  • 5 weeks ago, a 4.625 percent mortgage rate required 0 points
  • Today, the same 4.625 percent mortgage rate requires 3 points

1 point is equal to 1 percent of your loan size.

Last month’s worsening is the worst 1-month deterioration in consumer mortgage rates from all of 2009.

If you’re hoping for rates to fall back to early-December levels, know that it is possible. For this week, here’s some things that could push rates in the right direction:

  1. 3 Fed members are speaking. Each mention of economic under-performance in 2010 will be good for rates.
  2. Retail Sales data is released Thursday. If the numbers are weak, mortgage rates should improve.
  3. Consumer confidence surveys are released Friday. Lower confidence levels should help rates fall.

Be ready to lock at a moment’s notice this week.  Rates may rise or fall, but markets are positioned toward the former.That’s where momentum is pointing as of the Market Open today.

Keep an eye on rates and your loan officer on speed dial. Once the mortgage market starts breaking, it’s expected to break quickly.

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What’s Ahead For Mortgage Rates This Week : January 4, 2010

Monday, January 4th, 2010

Non-Farm Payrolls in focus this weekMortgage markets were relatively flat last week during holiday-shortened trading.  After starting the week with a Monday surge higher, mortgage rates settled down through Tuesday and remained somewhat flat into the early-close for New Year’s Eve.

However, as compared to the 4-month low posted post-Thanksgiving, conforming mortgage pricing has now worsened by more than 300 basis points.  In English, that means that a December 1 illinois mortgage rate quoted with zero points is available today at a cost of 3 points.

1 “point” is equal to 1 percent of how much you borrow.

If you were shopping for homes or rates last month, you no doubt noticed that pricing zoomed higher to close out 2009. How 2010 starts is anyone’s guess. This week will hold the answer.

It’s a week light with data, but heavy on importance.  The biggest news comes Friday in the form of the December employment report.

Last month, the Unemployment Rate fell for just the second time in 2 years and net job gains nearly turned positive.  Both points were bad for mortgage rates because a weak economy has helped keep rates down.  Evidence of improvement, therefore — at least according to Wall Street — is reason for reversal.

This month, analysts expect a net job gain of zero.  If they get it, the psychological effect of the data should cause stock markets to rise and mortgage markets to sink.

A worsening market is bad for rates.

Other data to watch this week is Tuesday’s Pending Home Sales report and Wednesday’s FOMC November Minutes release. Both can forcefully impact markets and rates.

Today is January 4 — there’s a lot of 2010 to go.  However, that won’t stop Wall Street from trying to figure it out. As the stock market rises and falls this week, the bond market will likely be in tow.  Abrupt movements mean changing mortgage rates and we’ll see more of our fair share of it over the next few weeks.

If you’re quoted a mortgage rate this week that fits your budget, consider locking it in.  Rates may fall in 2010, or they may not.  It’s a gamble on which you don’t want on the wrong side because when rates do rise, they’re likely to rise quickly.

Markets can’t sustain rates like this in an expanding economy.

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