Category Archives: Mortgage Rates

What’s Ahead For Mortgage Rates This Week : October 11, 2011

Posted on by

Unemployment Rate (2008-2011)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 Pennsylvania 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.

Should I Refinance My Home?

Posted on by

With mortgage rates at all-time lows, you may be asking “Is now a good time to refinance?”. This short interview from NBC’s The Today Show offers good insight.

Refinancing a mortgage is about more than just “low rates”. For example, there are costs associated with giving a new mortgage and even with the average, 30-year fixed rate mortgage near 4 percent, the costs of a such a move can outweigh the benefits — both in the short- and long-term.

The video originally ran in September when mortgage rates averaged 4.09%. Rates are different today, but the offered advice remains relevant.

Some of the key points raised include :

  • The lowest rates come with the highest costs. Consider a slightly higher-rate option from your bank.
  • Falling home values may make it harder to qualify for a refinance in the future. Your best time to act may be now.
  • If you’re many years into a 30-year loan, you can consider switching to a 15-year mortgage to avoid “resetting” your term.

And, lastly, the interviewee makes a strong point that your refinance should save you enough money to make paying the closing costs “worth it”. Make sure the break-even point on your closing costs versus your monthly savings occurs within a reasonable time frame.

At 4 minutes, the The Today Show video is short, but dense with quality information. For follow-up on whether a refinance makes sense for your situation, be sure to talk with your loan officer.

Freddie Mac : Mortgage Rates Sub-4 Percent

Posted on by

Freddie Mac PMMS average rates

Mortgage rates have dropped past 4 percent.

For the first time in more than 40 years, data from Freddie Mac’s weekly Primary Mortgage Market Survey shows the average 30-year fixed rate mortgage falling below 4 percent, dropping to 3.94 percent nationwide. It’s the lowest average 30-year fixed reading in the survey’s history.

In addition, Freddie Mac shows the 15-year fixed and 5-year ARM making new all-time lows, too, falling to 3.26% and 2.96%, respectively.

It’s a great time to be shopping for a mortgage or buying a home in Phoenixville. Because mortgage rates are dropping, housing payments are dropping, too. As compared to 8 months ago, for every $100,000 borrowed, homeowners now pay $66 less principal + interest each month.

On a $300,000 mortgage, that’s $71,280 saved in 30 years.

Mortgage rates have been lower for several reasons, some of which include :

  • U.S. economic growth has been slower-than-expected
  • Uncertainty surrounds Greece and the Eurozone
  • The Federal Reserve’s “Operation Twist“

In general, demand for mortgage bonds has been high and that’s caused mortgage rates to fall. It should be noted, however, that although the 30-year fixed rate mortgage fell below 4 percent this week, the amount of discount points required to lock that rate rose by 10 basis points, or $100 per $100,000 borrowed.

Homeowners in Pennsylvania are paying bigger fees for these lower rates. If you plan to move within a few years, these fees may wipe out your low-rate savings.

As you shop for a mortgage, pay attention to more than just rates. Low rates are great, but not when they come with high costs. Talk to your loan officer for help with making a plan than works for you.

What’s Ahead For Mortgage Rates This Week : October 3, 2011

Posted on by

Jobs report due this weekMortgage markets deteriorated last week as optimism for a Greek rescue package increased, and as U.S. consumers showed that, despite falling income levels, spending will not be slowed.

As reported by the government, household income dropped in August, falling 0.1 percent and marking the first monthly dip since 2009. Yet, consumer spending still rose, tacking on 0.1 percent. Consumer spending accounts for 70 percent of the U.S. economy.

In addition, last week Eurozone leaders approved a funding increase for the European “bailout fund”. The additional funding raises the probability that Greece will avoid default on its sovereign debt, and that other nations including Italy, Spain, Ireland and Portugal will avoid similar default scenarios.

The moves drew money away from mortgage markets, causing rates to rise.

Conforming mortgage rates in Pennsylvania climbed last week, stymying would-be refinancers in search of the lowest mortgage rates in 60 years. Nationally, fixed rate mortgages were higher by as much as 0.25%.

This week, rates may continue climbing.

First, European leaders are expected to finalize the details of a Greek aid package, a move that would reverse the “safe haven” bid which has played a large role in keeping U.S. mortgage rates lows.

Second, the jobs report is due.

Economists are expecting 65,000 net new jobs in September and a slight increase in the Unemployment Rate. A deviation from either consensus expectation should cause mortgage rates to move. 

If it’s shown that more than 65,000 jobs were created last month, mortgage rates should rise on the prospect of a recovering economy. To the contrary, though, if it’s shown that fewer than 65,000 jobs were created, mortgage rates should fall.

The jobs report will be released Friday morning, 8:30 AM ET.

If you’re shopping for a mortgage right now, be aware that rates could move in either direction, but there’s a lot more room for rates to rise than to fall. The “safe” course of action is to lock a rate today.