Thinking about getting a new mortgage? Here are just a few tips to help you get started–
Non-Farm Payrolls: Hit 175K vs recently lowered consensus estimates of around 139K. Most traders expected a reading lower than that. The prior two moths were both revised upward, so they were not as bad as originally thought. This much better than expected news is certainly negative for pricing and more importantly, is a real trend lower for your pricing which means that long term mortgage interest rates are going up and may continue to do so for the remainder of the year.
Rates continued to rise moderately in the past week. Freddie Mac announced that for the week ending February 27, 30-year fixed rates increased to 4.37% from 4.33% the week before. The average for 15-year loans rose to 3.39%. Adjustable rates fell last week with the average for one-year adjustables decreasing to 2.52% and five-year adjustables falling to 3.05%. A year ago 30-year fixed rates were at 3.51%. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Rates edged up with new home sales exceeding expectations and rising to a seasonally adjusted pace of 468,000 units in January, the strongest annual rate since July 2008. The 9.6 percent increase in new home sales for January followed an upward revision of 13,000 units in December. The S&P/Case-Shiller® 20-city composite house price index rose 13.4 percent over the 12-months ending in December 2013.” (Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes)
Despite the social unrest and political uncertainty in the Ukraine and Venezuela, and slower domestic economic growth suggested by recent weakness in housing, mortgage lending, and employment, stocks held strong and ended the month on a solid note. However, Federal Reserve Chair, Janet Yellen, attributed some of the recent weak data to unusually cold weather and reiterated that it would take a “significant change” in the economic outlook for the Fed to adjust its tapering plans. This means that we should continue to see rates go up unless the unrest in the Ukraine leads to investors buying US treasury bonds. That should keep rates where they are for the time being.
It’s like we always say, “Finding the right home is hard enough… choosing the right lender doesn’t have to be.” Let OUR TEAM go to work for you!
Initial Weekly Jobless Claims were higher than expectations (339K vs est of 330K). Not a huge miss, but the more closely watched four week moving average increased slightly to 336,750. This is another positive for bond prices but once again, these results are being discounted to some measure due to the weather. Continuing claims decreased again but that is largely due to long term unemployment benefits running out. What does this mean for mortgage interest rates and how are they affected? Unless we can
Janet Yellen spoke this morning- The Fed will continue on the path of tapering as long as their expectations of labor market improvement continue and the Fed will not necessarily raise their key interest rate (which affects our Prime Rate) if the 6.5% unemployment rate is reached.
Today rates and rebate pricing should remain flat, basically the same as Friday’s, since most lenders will have priced Friday’s early morning MBS (mortgage-backed securities) gains into Friday’s rates. Today the MBS (mortgage-backed securities) market is at a crossroads, and should be monitored carefully. Friday’s close was at the current trading range resistance level, so we would need to break above that today to see improvements in rates. With no economic news being released today, the market will take its direction from the stock market and overseas news.
NonFarm Payroll 113K vs est 185K this is a big miss and is positive for pricing.
The Prior period was revised from 74K to only 75K which is a big disappointment and is also positive for pricing.
Unemployment moved from 6.5% to 6.6% largely due to extended benefits expiring…not a factor in pricing.
Rates! I know that there is more to life than rate watching or looking for a house that may become available at the right price. BUT, I also know that we are facing an economic crisis here in America with the multitude of unemployed or underemployed people not working and either collecting unemployment or struggling to make ends meet. That is a concern when we hear (according to the media) how the economy is improving and that we are becoming an economically stronger country. Therefore the FEDs are tapering the purchasing of bonds and MBS which has kept the rates so artificially low for the past nearly 3 years. So, rates will be going up. Home values may be going up at the same time which will put buying a new home at a disadvantage. My suggestion? If you are in the home buying mode and are considering jumping into this market, buy now before the home that you want to buy may become less affordable.