Archive for Eurozone
Home Affordability Getting A Springtime Boost From Greece
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Home affordability is receiving a boost from across the Atlantic Ocean this spring.
For the third time in as many years, a weakening Eurozone is pushing May mortgage rates to new lows throughout Wisconsin and nationwide.
The story centers in Greece and begins in 2010.
2 years ago, it was uncovered that successive Greece governments had purposefully misreported the nation-state’s economic statistics in order to meet European Union standards. The fraudulent data had permitted Greek governments to spend beyond their means while hiding deficits from EU auditors.
The realization that Greece was heavy in debt with little means to repay its creditors resulted in a massive bailout from the IMF and the rest of the Eurozone nations. The terms for Greece said that, in order to receive its €110 billion aid package, Greece would be required to enact strict spending controls.
This is known as “austerity” and the deal was met with outrage by the Greek public. There’s been general social unrest ever since and, on May 6 of this year, Greece held a special “early election” to elect all 300 members to its legislature.
No party won majority in the elections.
7 different groups garnered seats in the parliament last week with anti-austerity groups faring well. It’s spurred concern that Greece will end its bid for fiscal restraint, and that Greece may choose to leave the 17-nation Eurozone.
The uncertainty surrounding Greece is helping U.S. mortgage rates to make new lows. As concerns mount for the future of Greece — and the Eurozone, in general — global investors seek safer markets for their money.
The U.S. mortgage-backed bond market is one such market.
With the implied backing of the U.S. government, mortgage-backed bonds are viewed as nearly risk-less and investors clamor for safety of principal during uncertain times. The boost in demand drives bond prices up and bond yields down, resulting in lower mortgage rates for home buyers and refinancing households of Lake Geneva.
So long as Greece struggles to form its government and flirts with a sovereign debt default, mortgage rates should continue to face downward pressure. U.S. rates may not fall week after week, but analysts expect any rise in rates to be muted.
What’s Ahead For Mortgage Rates This Week : May 14, 2012
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Mortgage markets worsened slightly last week as positive U.S. economic news overshadowed growing concerns for the Eurozone’s future. Political and economic issues continue to weigh on Greece and Spain, and it’s still unknown how France’s new President will change that nation’s fiscal direction.
Conforming mortgage rates in Wisconsin edged higher on the week overall.
Last week was light on economic data, but the figures released suggest an improving U.S. economy.
For example, the Bureau of Labor Statistics reported 3.7 million job openings nationwide this past March, marking the highest amount since July 2008. Voluntary separations (i.e. “quit jobs”) increased, too — also at levels not seen since 2008.
Voluntary separations may hint at labor market improvement because employees rarely leave a steady-paying job without the prospect of a new job ahead. Furthermore, the four-week moving average of first-time unemployment claims fell for the first time in a month.
The jobs market is one of two key sectors expected to lead the economy forward this year.
The other is housing and, this week, there will be two key housing reports for Wall Street to review. The first is Tuesday’s homebuilder confidence survey from the National Association of Homebuilders. The second is Wednesday’s Housing Starts data for April.
Mortgage rates may also be affected by the Tuesday release of the Retail Sales report and Consumer Price Index report; and, by the Federal Reserve’s Wednesday release of the FOMC Minutes from its last meeting.
For home buyers and mortgage rate shoppers, mortgage rates remain at all-time lows. According to Freddie Mac, the average 30-year fixed rate mortgage rate nationwide is 3.83% for borrowers willing to pay 0.7 discount points and a full set of closing costs — the lowest rate-and-fee combination in Freddie Mac’s recorded history.
However, low mortgage rates may not last much longer — especially if the Eurozone can reverse course on its ailing economies.
Mortgage rates remain volatile and sensitive to changes in market conditions. If today’s mortgage rates fit your budget, consider locking in.
What’s Ahead For Mortgage Rates This Week : May 7, 2012
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After two weeks of no change, mortgage markets improved last week, pushing mortgage rates lower throughout Wisconsin.
The majority of the improvements occurred Friday after the April jobs report failed to impress Wall Street, and after it became clear that the Eurozone’s struggles with sovereign debt would continue.
According to Freddie Mac, conforming 30-year fixed rate mortgage rates fell to 3.84% nationwide, on average, for borrowers willing to pay 0.8 discount points at closing plus a full set of closing costs.
1 discount point is equal to 1 percent of your loan size such that one discount point on a $200,000 loan would require $2,000 to be paid at-closing.
Freddie Mac’s reported rates for the benchmark 30-year fixed rate mortgage are the lowest in recorded history.
The 15-year fixed rate mortgage is also at its lowest point in history. According to Freddie Mac’s survey, the 15-year fixed averaged 3.07% with 0.7 discount points last week. One year ago, the rate was 3.89%.
This week, with a data-sparse economic calendar, mortgage markets will likely take cues from events in Europe. Notably, France has elected a new leader, one that prefers growth over austerity; and voters in Greece have “punished” austerity-backing leaders, in the process creating a split parliament.
Each event adds uncertainty to an already unstable economic environment and uncertainty favors U.S. rate shoppers.
Doubt spurs investors to seek “safe” assets and U.S. government-backed bonds — including mortgage backed bonds — meet that criteria. As demand for mortgage bonds rise, mortgage rates tend to fall.
This week, rates are starting the week improved. Whether it’s a knee-jerk reaction to Eurozone news from the weekend, or low rates are here to stay is tough to know. Therefore, if today’s mortgage rates look good to you, consider locking something in. There’s more room for rates to rise than to fall.
What’s Ahead For Mortgage Rates This Week : February 13, 2012
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Mortgage markets were mostly unchanged last week as Greece — once again — was front-of-mind for Wall Street investors. The nation-state is attempting to avoid a debt default, and has been attempting to avoid default since May 2010.
Early in the week, Greece reached a deal with European Union leaders to secure additional financial aid. By Friday, however, the deal was in doubt, as the EU leaders declared that the Greek Parliament would have pass new austerity measures before the aid would be released.
Austerity measures have been unpopular in Greece, giving rise to riots among citizens and resignations among politicians. Markets responded to the potential undoing of the debt deal by seeking safety in bonds — including U.S. mortgage-backed bonds.
The Greek debt default story has helped fuel low mortgage rates in Wisconsin. Once a final deal is reached, mortgage rates are likely to rise.
For now, though, mortgage rates remain at all-time lows.
According to Freddie Mac’s weekly mortgage rate survey, the average, conforming 30-year fixed mortgage rate held firm at 3.87% last week for mortgage borrowers willing to pay an accompanying 0.8 discount points plus applicable closing costs. 1 discount point is equal to one percent of your loan size.
For borrowers unwilling to pay discount points and/or closing costs, average mortgage rates are higher.
This week, data returns to the U.S. economic calendar.
Greece will still be in play, but the health of the U.S. economy will determine in which direction mortgage rates will go. There are two inflation reports due — the Consumer Price Index and the Producer Price Index.
The former is a “cost of living” indicator for U.S. households; the latter measures the same for business. Inflation is bad for mortgage rates so if either report comes in unexpectedly high, mortgage rates are likely to rise.
The same is true for Tuesday’s Retail Sales report.
Retail Sales account for close to 70% of total U.S. economic activity. An unexpectedly strong Retail Sales figure will suggest that the domestic economy is improving and that, too, would pressure mortgage rates up.
If you’re shopping for a mortgage, or floating one with your lender, consider locking in this week. Mortgage rates don’t have much room to fall and there’s much room to rise.
What’s Ahead For Mortgage Rates This Week : February 13, 2012
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Mortgage markets were mostly unchanged last week as Greece — once again — was front-of-mind for Wall Street investors. The nation-state is attempting to avoid a debt default, and has been attempting to avoid default since May 2010.
Early in the week, Greece reached a deal with European Union leaders to secure additional financial aid. By Friday, however, the deal was in doubt, as the EU leaders declared that the Greek Parliament would have pass new austerity measures before the aid would be released.
Austerity measures have been unpopular in Greece, giving rise to riots among citizens and resignations among politicians. Markets responded to the potential undoing of the debt deal by seeking safety in bonds — including U.S. mortgage-backed bonds.
The Greek debt default story has helped fuel low mortgage rates in Wisconsin. Once a final deal is reached, mortgage rates are likely to rise.
For now, though, mortgage rates remain at all-time lows.
According to Freddie Mac’s weekly mortgage rate survey, the average, conforming 30-year fixed mortgage rate held firm at 3.87% last week for mortgage borrowers willing to pay an accompanying 0.8 discount points plus applicable closing costs. 1 discount point is equal to one percent of your loan size.
For borrowers unwilling to pay discount points and/or closing costs, average mortgage rates are higher.
This week, data returns to the U.S. economic calendar.
Greece will still be in play, but the health of the U.S. economy will determine in which direction mortgage rates will go. There are two inflation reports due — the Consumer Price Index and the Producer Price Index.
The former is a “cost of living” indicator for U.S. households; the latter measures the same for business. Inflation is bad for mortgage rates so if either report comes in unexpectedly high, mortgage rates are likely to rise.
The same is true for Tuesday’s Retail Sales report.
Retail Sales account for close to 70% of total U.S. economic activity. An unexpectedly strong Retail Sales figure will suggest that the domestic economy is improving and that, too, would pressure mortgage rates up.
If you’re shopping for a mortgage, or floating one with your lender, consider locking in this week. Mortgage rates don’t have much room to fall and there’s much room to rise.
What’s Ahead For Mortgage Rates This Week : February 6, 2012
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Mortgage markets worsened last week as domestic job growth surprised Wall Street and the Eurozone moved yet one more step closer to reaching a lasting Greece sovereign debt solution.
Conforming mortgage rates in Wisconsin rose on the news, although you wouldn’t know it from looking at Freddie Mac’s weekly mortgage rate survey.
According to Freddie Mac, the average 30-year fixed rate mortgage rate fell to 3.87% last week with 0.8 discount points due at closing, plus closing costs. 1 discount point is a fee equal to one percent of your loan size.
3.87% for a 30-year fixed rate mortgage is the official, all-time low for the weekly Freddie Mac survey, conducted since the 1970s. However, because Freddie Mac gathers its results on Monday and Tuesday only, by the time the survey results were released Thursday morning, mortgage rates were already rising off their lows.
Then, Friday morning, after January’s Non-Farm Payrolls data was released, mortgage rates surged.
The January jobs report exceeded expectations in nearly every fashion possible :
- Economists expected to see 135,000 jobs created in January. The actual number was 243,000.
- Economists expected to see the Unemployment Rate at 8.5% in January. The actual number was 8.3%.
- Revisions added an additional 180,000 net new jobs to the original 2011 tally.
As compared to one year ago, there are 2.1 million more people employed in the U.S. workforce. Figures like this hint at a stronger national economy, and that tends to drive mortgage rates up.
This week, with little economic data due for release, mortgage rates are expected to move on momentum. Right now, that momentum is causing rates to rise.
If you’re shopping for a mortgage rate in Williams Bay and want to know if the time is right to lock, consider that it’s impossible to time a market bottom, but simple to spot a “good deal”.
Mortgage rates remain near historical lows — it’s a good time to lock one in. Call your lender today.
What’s Ahead For Mortgage Rates This Week : January 30, 2012
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Mortgage markets improved last week as news from the Federal Reserve, the U.S. economy, and Europe combined to spur new demand for mortgage-backed bonds.
Conforming mortgage rates rallied from Wednesday through Friday’s close, ending the week near all-time lows set earlier this year.
Last week’s rally was sparked by the Federal Open Market Committee.
After its first meeting of the year, Chairman Ben Bernanke & Co. changed its projection for “exceptionally low rates” to at least late-2014. Previously, the Fed had said its benchmark Fed Funds Rate would remain low until 2013.
This, in conjunction with the Fed’s message that further economic stimulus may be coming, led Wall Street investors to increase their bets on mortgage bonds, pushing up prices and pushing down yields.
Lower yields means lower rates.
Mortgage rates were also helped lower by mixed data on the U.S. economy including weaker-than-expected housing reports, and another setback in the Greece sovereign debt negotiations.
Each time that Eurozone leaders have failed to reach an expected accord with Greece since 2010, mortgage rates have dropped. Last week was no different.
This week, with a large amount of U.S. economic data due for release and a high-profile summit among European Union leaders, mortgage rates are poised to move. Unfortunately, we can’t know in which direction.
Some of the news that will move markets include :
- Monday : Personal Consumption Expenditures
- Tuesday : Consumer Confidence; Case-Shiller Index
- Wednesday : Construction Spending
- Thursday : Weekly Jobless Claims
- Friday : Non-Farm Payrolls;Factory Orders
Of all of the economic releases, Friday’s Non-Farm Payrolls has the most potential to move markets. More commonly called “the jobs report”, Non-Farm Payrolls details the monthly change in national employment and the national Unemployment Rate.
Jobs are believed to be the key to U.S. economic recovery so strength in jobs should result in higher mortgage rates throughout Wisconsin and the country.
Mortgage rates remain very low. If you’re nervous about mortgage rates rising this week or next, it’s as good of a time as any to lock your rate with a lender, and start moving toward closing.
What’s Ahead For Mortgage Rates This Week : December 12, 2011
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Mortgage markets were mostly unchanged for the 6th consecutive week last week as Wall Street’s uncertainty regarding the future of U.S. and global economies remain.
Mortgage bonds made gains made through the early part of the week, which caused mortgage rates in Wisconsin to drop Monday through Wednesday afternoon. Those gains were erased, however, as 23 of 27 Euro leaders reached agreement on fiscal coordination and budget planning, sparking optimism for the future of the Eurozone, in general.
Mortgage rates rose Thursday and Friday.
This week, the momentum may continue. The main story we’ll be watching is the Federal Open Market Committee’s Tuesday meeting — its 8th scheduled meeting of the year and its last until 2012.
When the Fed meets, mortgage rates are often volatile.
At its meeting, the FOMC is expected to vote the Fed Funds Rate unchanged within its current range near zero percent. However, it won’t be the Fed’s vote on the Fed Funds Rate that changes markets. Wall Street is keyed in to two other elements, instead.
The first element is the verbiage of the FOMC’s press release to markets. Issued upon adjournment, the FOMC’s press release identifies strengths and weaknesses in the U.S. economy, and offers an outlook for the future plus potential threats. The “tone” of the press release can change how mortgage bonds trade.
If the Fed describes an economy in recovery with few threat to growth, mortgage rates are likely to rise post-FOMC. By contrast, if the Fed says the economy has slowed, mortgage rates should fall.
The second element on which Wall Street is focused is the likelihood of new, Fed-led economic stimulus. Should the Federal Reserve modify existing support programs, or introduce new ones, mortgage rates are sure to shift. Unfortunately, we can’t know in which direction — it will depend on the size of the program and its expected impact on the U.S. economy.
The Fed adjourns Tuesday at 2:15 PM ET.
Beyond the Fed, there is other rate-moving news, too, including Tuesday’s Retail Sales report, Thursday’s Producer Price Index, and Friday’s Consumer Price Index. Each has the capacity to change mortgage rates throughout Lake Geneva real estate so if you’re floating a mortgage rate, it may be a good time to lock one in.
Freddie Mac reports the average 30-year fixed rate mortgage at 3.99% with 0.7 discount points, plus closing costs.
What’s Ahead For Mortgage Rates This Week : December 5, 2011
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Mortgage markets made little change last week for the fifth time in as many weeks.
As Wall Street watched both the Eurozone and the U.S. regain their respective footing, expectations for a new Fed-led stimulus increased, which prevented mortgage rates from rising.
According to Freddie Mac, the average 30-year fixed rate conforming mortgage rose just 2 basis points last week to 4.00% nationwide with an accompanying 0.7 discount points.
1 discount point is equal to 1 percent of your loan size.
For every $100,000 borrowed at 4.00 percent, therefore, today’s Wisconsin mortgage applicant should expect to pay $700 in “points”. Mortgage rates for “zero-point loans” are higher than Freddie Mac’s published, average value.
This week, with few economic releases set for release, last week’s big stories should carry over into the current one — the biggest of which was a worldwide, coordinated central bank effort to increase system liquidity.
The European Central Bank, Bank of England and U.S. Federal Reserve were joined by the central banks of Japan, Canada and Switzerland in the effort. Stock markets rallied on the news.
Another of last week’s big stories was the sharp drop in the U.S. Unemployment Rate.
After hovering near nine percent since April, the Unemployment Rate broke out of range, dropping to to 8.6% in November. This is the lowest national Unemployment Rate since March 2009, a milestone achieved via the combination of new jobs created (+192,000 in November with revisions) plus a smaller U.S. workforce.
The U.S. economy has added 1.9 million jobs in the last 14 months.
Lastly, last week’s New Home Sales and Pending Home Sales Index releases support the growing belief that the U.S. housing market is in recovery. Both reports showed strong growth for October, corroborating what home builders have been saying — the housing market is improving and buyer ranks are growing.
Home supplies are lower in many U.S. markets.
This week, rate shoppers in Lake Geneva mortgage should be on alert. Market momentum changes quickly, and rates are currently anchored by the expectation of new Federal Reserve stimulus. The Fed meets December 13, 2011. As that date approaches, expectations could change, causing rates to rise.
Mortgage rates remain near all-time lows. It’s a good time to lock a rate with your lender.
What’s Ahead For Mortgage Rates This Week : November 28, 2011
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Mortgage markets worsened slightly last week through a bouncy, holiday-shortened trading week. Markets were closed Thursday for Thanksgiving and re-opened only briefly Friday.
As in past weeks, though, economic, political, and financial news from the Eurozone dictated the direction of U.S. mortgage-backed bonds.
As Greece — and now Italy — have faltered, investors have sought to preserve their respective principal, moving money from unsafe assets to safe ones, a class which includes Fannie Mae- and Freddie Mac-backed mortgage bonds.
This investment pattern is known as “safe haven” buying and it’s why mortgage rates tend to improve when large economies grow unstable. Government mortgage bonds are considered among the safest securities available.
The average 30-year fixed rate mortgage is available for 3.98%, according to Freddie Mac, with borrowers expected to pay an accompanying 0.7 discount points. 1 “discount point” is a loan fee equal to 1 percent of your loan size.
“No-point loans” carry higher rates than the Freddie Mac-published figures, but come with lower closing costs.
This week, there are several reasons to expect mortgage rates to rise throughout Wisconsin.
First, markets are speculating that the IMF will lend Italy 600 billion euro to help avert financial crisis. This move would reverse the safe haven buying that’s characterized the last few weeks of trading, thereby leading mortgage rates higher.
A second reason is that they are early reports that Black Friday shoppers out-spent analyst estimates. Consumer spending is the largest part of the U.S. economy so, if spending is up, the economy should be up, too.
As before, this would reverse some of the safe haven buying that’s helped keep mortgage rates low.
Lastly, this week is stuffed with new data including Friday’s always-important Non-Farm Payrolls report. Wall Street expects 116,000 net new jobs created in November. If the actual figure is much higher, mortgage rates will rise.
Expect mortgage rates to be volatile this week. Your quoted mortgage rates could vary by as much as a quarter-percent from day-to-day. If you’re nervous about losing a low rate that’s been offered to you, consider locking in.