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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.
What’s Ahead For Mortgage Rates This Week : November 21, 2011
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Mortgage markets went unchanged last week as Wall Street traded on new debt stress within the Eurozone, and stronger-than-expected economic data here at home.
Rates moved very little from Monday to Friday and the storyline’s not expected to change much this week for today’s rate shoppers.
According to Freddie Mac, conforming 30-year fixed rate mortgages remain priced at 4.000% with 0.7 discount points on average, where 1 discount point equals one percent of the loan size. For people who prefer “zero-point” mortgages, expect a mortgage rate above 4.000%.
By contrast, loans with 1 point or more are priced below 4.000 percent.
However, in this holiday-shortened trading week, mortgage volatility should be up, and rates may finally break from the 4.000 benchmark we’ve hovered since November 1.
What’s unclear is whether rates will rise or fall.
For 8 months, we’ve talked of how events in Greece have influenced the U.S. mortgage market and, how each time Greece moved to the precipice of default, the U.S. mortgage bond market improved, causing mortgage rates to fall.
Last week, similar default concerns emerged for Italy and Spain. This applied downward pressure on U.S. mortgage rates, but a strong retail sales report; a better-than-expected New Home Sales data; and soaring homebuilder confidence renewed talk of domestic inflation in 2012 and beyond.
Inflation erodes the value of the U.S. dollar and leads to higher mortgage rates.
This week, we get a full set of data :
- Monday : Existing Home Sales
- Tuesday : FOMC Minutes; GDP; 5-Year Treasury Auction
- Wednesday : Jobless Claims; Personal Income and Outlays; Consumer Sentiment
In addition, Wednesday marks the deadline for the congressional “super-committee” tasked with finding $1.2 trillion in federal budget savings over the next 10 years. The committee was formed in the wake of August’s downgrade of U.S. federal debt by Standard & Poors.
If Congress fails to meet its goal in time, stock markets should suffer and mortgage rates may fall.
What’s Ahead For Mortgage Rates This Week : November 14, 2011
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Amid a dearth of new U.S. economic data, Eurozone developments led mortgage markets down in last week’s holiday-shortened trading week. Mortgage rates across Wisconsin worsened slightly, increasing week-over-week for the first time in a month.
Freddie Mac reports the average 30-year fixed rate mortgage at 3.99% with an accompanying 0.7 discount points. Discount points are loan fees, and 1 discount point is equal to 1 percent of your loan size.
Greece has dominated mortgage market headlines since February. As the nation-state aims to reign in its national spending, it has also adopted harsh austerity measures. The combination is meant to prevent future debt defaults, but global investors remain concerned that problems in Greece may spill over into other Eurozone nations.
As those concerns have grown, U.S. mortgage markets have benefited. This is because U.S. mortgage markets are backed by the U.S. government, and investors treat the U.S. mortgage market as “safe” compared to other security-types.
Safe investments are in high demand during uncertain times, often improving in price. This pattern is known as Safe Haven Buying and it’s one reason why mortgage rates tend to fall when the economy is sagging. Mortgage rates move opposite of mortgage bond prices.
This week, U.S. economic data returns, but markets will still be watching the Eurozone. Sunday, Italy changed leadership, in part, to restore market confidence in its ability to get its debt load under control.
Expect developments in Italy to sway U.S. mortgage rates this week. In addition, rates will respond to a rash of economic data and Fed speakers :
- Tuesday : Producer Price Index, Retail Sales, 5 Fed speakers
- Wednesday : Consumer Price Index, Housing Price Index, 2 Fed speakers
- Thursday : Housing Starts, Jobless Claims, 1 Fed speaker
Mortgage rates remain near all-time lows, with not much room to drop. If you’re shopping for a mortgage rates, therefore, consider locking in. As Greece and Italy show signs of moving forward, expect Safe Haven Buying to recede, and mortgage rates to rise.