Tag Archives: Greece

What’s Ahead For Mortgage Rates This Week : October 31, 2011

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Federal Reserve meeting this weekMortgage markets moved across a wide range last week before, ultimately, finishing unchanged. The bailout of Greece both dominated headlines and dictated market direction.

It was a wild ride for rate shoppers.

Early in the week, mortgage rates spiked. Eurozone leaders expressed optimism that a deal for Greece’s solvency would be made, rhetoric to which Wall Street responded selling mortgage bonds.

When markets closed Wednesday, conforming mortgage rates in Pennsylvania were at their highest levels since September.

However, when markets opened Thursday, rates began to reverse lower. Investors deemed the details of the Greece fuzzy, and, once again, sought safety in the U.S. mortgage bond market.

As such, rates fell through Friday afternoon, closing the week precisely where they started.

This week’s market action figures to be similarly busy. In addition to Friday’s release of the October Non-Farm Payrolls data, the Federal Open Market Committee starts a 2-day meeting Tuesday.

It’s the FOMC’s 7th scheduled meeting of the year.

The FOMC is the Federal Reserve’s monetary policy-setting group. It does not set mortgage rates for citizens of Phoenixville , but it can exert an influence. For example, if the FOMC votes to increase the size of its Operation Twist, mortgage rates may respond favorably, causing rates to fall. 

Conversely, if the FOMC scales back the size of its program because of inflationary concerns or otherwise, mortgage rates should rise. 

The Federal Open Market Committee meeting ends at 2:15 PM ET Wednesday and mortgage rates are typically volatile in the hours surrounding the group’s adjournment. If you’re floating a mortgage rate or deciding whether to lock, keep this date and time in mind.

What’s Ahead For Mortgage Rates This Week : October 24, 2011

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Greece may not get its aidMortgage 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 Pennsylvania 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 17, 2011

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Mortgage bonds suffered through another tough week last week as rising optimism that Eurozone leaders will “rescue” Greece plus stronger-than-expected economic data in the U.S. led bonds lower for the second straight week.

Conforming and FHA mortgage rates in Pennsylvania moved sharply higher. After reaching an all-time low just two weeks ago, 30-year fixed mortgage rates are now at a 2-month high.

There were several big stories in the mortgage bond market last week. Each was bad for consumer mortgage rates.

The first big story was tied to Greece. As meetings continue between Eurozone leader and rhetoric heats up, it’s becoming increasingly clear that Greece will receive its next wave of debtor aid. The planned rescue of Greece is undoing the safe haven buying that characterized the mid-summer financial markets. 

With investors more willing to take risks, mortgage bonds are selling off, and rates are rising.

The next big story was the release of the Federal Reserve’s September meeting minutes. The central bank’s meeting recap showed that the Fed considered additional stimulus beyond its Operation Twist, even as inflationary pressures are increasing. Because inflation lowers the value of outstanding mortgage bonds, rates climbed post-release.

Lastly, last week we learned that the U.S. consumer will not be deterred. Retail Sales grew 1.1 percent in September — much more than Wall Street’s expectation. This, too, caused a mortgage bond sell-off and led to a late-Friday surge in rates.

Markets should open worse this morning, pressuring rates higher yet again. However, there’s plenty of data this week for which rate shoppers should be watching :

  • Tuesday : Producer Price Index; Housing Market Index
  • Wednesday : Consumer Price Index; Housing Starts
  • Thursday : Existing Home Sales

In addition, there are 8 Fed speakers this week. Each can move markets.

Despite rising rates, mortgage rates remain low nationwide. If you’ve been shopping for a rate, it’s not too late to lock in. Talk to your loan officer and make a plan to get locked, and get closed. 

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

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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.

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

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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.