Posts Tagged ‘FOMC’

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What’s Ahead For Mortgage Rates This Week : April 23, 2012

Monday, April 23rd, 2012

FOMC meets this weekMort­gage mar­kets were mostly unchanged last week, break­ing a three-week win­ning streak. Wall Street grap­pled with sur­pris­ing demand on Spain’s debt issuance and a series of weaker-than-expected data points on U.S. housing.

Con­form­ing mort­gage rates rose slightly accord­ing to the weekly Fred­die Mac Pri­mary Mort­gage Mar­ket Survey.

Nation­wide, the 30-year fixed rate mort­gage rate climbed 2 basis points to 3.90%. This rate is avail­able to home­own­ers will­ing to pay 0.8 dis­count points and a full set of clos­ing costs, where 1 dis­count point is equal to 1 per­cent of the bor­rowed amount.

Prior to last week’s sur­vey, just 0.7 dis­count points were required.

This week, mort­gage rates are expected to be volatile. There is a lot of eco­nomic data due for release, the Eurozone’s issues with sov­er­eign debt remain unre­solved, and the Fed­eral Open Mar­ket Com­mit­tee gets together for a sched­uled, 2-day meeting.

On the data front, the week starts with Tuesday’s Con­sumer Con­fi­dence fig­ures and the government’s New Home Sales report. Both have the power to move mort­gage rates. The week then con­cludes with the Pend­ing Home Sales Index; the GDP release; and a series of Trea­sury auctions.

With respect to Europe, demand remains strong for debt from Spain, but at much higher rates as com­pared to sev­eral weeks ago. The same is true for Italy. Both nations are feared to be at risk of default on their respec­tive sov­er­eign debt. It’s a sim­i­lar sit­u­a­tion to that which occurred in Greece through­out 2011.

Long-term, lin­ger­ing con­cerns for Spain and Italy would likely help keep U.S. mort­gage rates suppressed.

And, lastly, the Fed­eral Reserve will make a state­ment to mar­kets Wednes­day after­noon. The Fed is the nation’s cen­tral banker and its post-meeting press releases have tremen­dous influ­ence on bond mar­kets, includ­ing those for mortgage-backed bonds.

By exten­sion, there­fore, the Fed­eral Reserve’s state­ment has the power to move mort­gage rates.

If you’re shop­ping for mort­gage rates, it’s as good of a time as any to lock with your lender. Rates have more room to rise than to fall.

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What’s Ahead For Mortgage Rates This Week : April 16, 2012

Monday, April 16th, 2012

Retail SalesMort­gage mar­kets improved last week as a global flight-to-quality con­tin­ued. With Spain fac­ing ques­tions on its sov­er­eign debt, investors con­tin­ued to pare expo­sure to risky assets, spark­ing demand for the rel­a­tive safety of U.S. government-backed mortgage-backed bonds.

As a result, con­form­ing and FHA mort­gage rates slipped for the third straight week last week. 

Accord­ing to Fred­die Mac’s weekly Pri­mary Mort­gage Mar­ket Sur­vey, the aver­age 30-year fixed rate mort­gage avail­able to bor­row­ers is down to 3.88% nation­wide with an accom­pa­ny­ing 0.7 dis­count points plus “typ­i­cal” clos­ing costs.

Last week’s reported 3.88 per­cent rate for the 30-year fixed rate mort­gage is within one-tenth of one per­cent of the low­est, aver­age mort­gage rates in Fred­die Mac sur­vey his­tory. How­ever, the last time con­form­ing rates were reported in this range, the accom­pa­ny­ing, required dis­count points were higher than last week’s 0.7.

Mean­while, at 3.11% nation­wide with 0.7 dis­count points plus clos­ing costs, the 15-year fixed rate mort­gage rate is equally low. It, too, set a record last week.

It’s a good time to be look­ing for a mort­gage. Rates and fees are great.

Last week, mar­kets moved on momen­tum. This week, they’ll move on data. The eco­nomic cal­en­dar is busy.

  • Mon­day : Retail Sales; Hous­ing Mar­ket Index
  • Tues­day : Hous­ing Starts
  • Thurs­day : Weekly Job­less Claims; Lead­ing Indi­ca­tors; Exist­ing Home Sales

In addi­tion, two Fed­eral Reserve mem­bers offer pre­pared remarks Mon­day. They will be the last pub­lic Fed com­ments before next week’s 2-day FOMC meeting.

Mort­gage rates remain low. Con­sider call­ing or email­ing your loan offi­cer to learn more about your cur­rent financ­ing options.

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Fed Minutes Causes Mortgage Rates To Rise Suddenly

Wednesday, April 4th, 2012

FOMC Minutes March 2012The Fed­eral Reserve has released the min­utes from its last FOMC meet­ing, a 1-day affair held March 13, 2012. Mort­gage rates are ris­ing on the news.

For the un-indoctrinated, 3 weeks after it meets, the Fed­eral Open Mar­ket Com­mit­tee, the sub-group within the Fed­eral Reserve that votes on U.S. mon­e­tary pol­icy, pub­lishes its meet­ing minutes.

Sim­i­lar to the min­utes from a cor­po­rate event, or con­do­minium asso­ci­a­tion meet­ing, the Fed Min­utes recounts the con­ver­sa­tions and debates that tran­spired through­out the meeting.

The Fed Min­utes is a lengthy pub­li­ca­tion, often fill­ing 10 pages or more. By con­trast, the more well-known pub­li­ca­tion from the FOMC — its post-meeting press release — tends to span 6 para­graphs or less.

The extra detail con­tained within the Fed Min­utes is Wall Street fod­der, espe­cially given the cur­rent eco­nomic uncer­tainty. Investors look to the Fed­eral Reserve for clues about what’s next for the U.S. economy.

Lately, the min­utes has made an out-sized impact on mort­gage rates. The Fed’s words con­tinue to swing the mortgage-backed bond market.

Today is no different.

March’s Fed Min­utes is a dense one and mar­kets are react­ing. The text shows a cen­tral bank softly divided on future U.S. eco­nomic pol­icy, and in debate about whether exist­ing mar­ket stim­u­lus should be removed.

The Fed has said that it’s expect­ing high lev­els of unem­ploy­ment and low lev­els of infla­tion in the com­ing months, an out­look that leaves lit­tle rea­son to intro­duce a third round of stim­u­lus. This is the pri­mary rea­son why mort­gage rates have been climb­ing since the Fed Min­utes’ release.

Since mid-March, mort­gage rates dropped on spec­u­la­tion that the Fed­eral Reserve would intro­duce a mort­gage bond pur­chase pro­gram this quar­ter. Today, those expec­ta­tions have reversed.

Accord­ing to the min­utes, the Fed­eral Reserve believes that addi­tional mar­ket stim­u­lus would only be nec­es­sary “if the econ­omy lost momen­tum”, or if infla­tion remained too far below 2 per­cent per year. Currently, Core PCE — the Fed’s pre­ferred gauge of infla­tion — is run­ning slightly below 2 percent.

The Fed­eral Reserve’s next sched­uled meet­ing is April 24–25, 2012 — its third of 8 sched­uled meet­ings this year.

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