Mortgage rates shot dramatically higher after Friday’s long-awaited employment report.

Prior to Friday mortgage rates were relatively steady throughout most of the week trading within a narrow range.   The unemployment rate in October stood at 7.3% and the economy added 204,000 jobs. Traders expected the unemployment rate at 7.3% and the creation of 110,000 jobs. Mortgage interest rates finished the week worse by approximately 7/8 of a discount point.

Adding to the angst of bond traders was a third quarter GDP report that also raised expectations the Fed might begin decreasing their bond purchases in December.  The Commerce Department’s release of its advance third-quarter estimate of GDP showed an annualized economic growth rate of 2.8%, well above consensus estimates of 1.9%.

The Bond markets are closed Monday in observance of Veterans Day, and the economic calendar is light the rest of the week.  The biggest events on this week’s calendar are prepared speeches from five Federal Reserve members, including one from Federal Reserve Chairman Ben Bernanke.

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Traders will be listening to the Fed speeches, searching for clues about whether QE3 will continue indefinitely, or whether the program is headed for a “taper”. Rates are expected to move sharply should the Fed provide specific, clear direction.

Mortgage rates remain low, compared to historical levels now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Paul Cantor

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Mortgage interest rates dipped once again last week, reaching a 19 week low.  The price of a typical 30 year fixed rate mortgage improved by more than 60 basis points.

Other big news last week has to do with changes to HARP (Home Affordable Refinance Program).  If HUD follows suite with similar changes to the FHA Streamline refinance, thousands more homeowners will be able to see big savings.

This week is going to be packed with economic data releases.  Today’s pending home sales numbers point to a slowing housing market but appreciation is holding.  This slow down in pending sales in August and September is most likely a reflection of higher mortgage rates and inventory selection.  Rates have recently fallen so it will be interesting to see pending home sales for October.

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Data on almost every sector of our economy will be released this week.  The focus will naturally be on Wednesday’s Federal Open Market Committee’s (FOMC aka “the Fed”) interest rate decision and policy statement.  Most economist and traders are not expecting the FOMC to make any changes to their policies or time tables.

Mortgage rates are at a multi-month low.  It’s a great time to see if it makes sense to refinance or purchase a home.  Homeowners who missed their chance to refinance earlier this year have a second opportunity to save.  Home buyers are getting a boost to their purchasing power.

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Mortgage rates inched up last week.  Trading throughout last week remained volatile with typical daily swings of about 3/8ths of a discount point.  Refinance activity has picked up as rates are still better than they were over the summer.  Activity on HARP, VA IRRL and FHA streamline refinances is up.  President Obama made it official that Janet Yellen will be replacing Ben Bernanke as the next Fed chair.  This move had been anticipated by the market.

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This week’s economic calendar has a significant amount of activity but markets seem to be focused on the negations in Washington over the debt ceiling and government shutdown.

Now is a great time to take advantage of mortgage interest rates at these historically favorable levels.

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Mortgage rates remained basically flat last week.  The government shut-down most likely means the paralysis and uncertainty will continue.  The lack of economic data will continue to feed little movement.  However other news that may cause large market swings.

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 The financial markets are largely taking a wait and see approach to the government’s budget and debt ceiling conundrum to see if it can be resolved before real harm is done to the economy.  The 10-year Treasury yield and FNMA bonds are at extreme levels and are poised for a move that would generate lower bond prices, higher yield and higher mortgage rates.  The longer the budget and debt ceiling drama plays out the greater market volatility could build leading to exaggerated moves in the financial markets.

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 Over the past three weeks mortgage rates are down by about 0.35%, home loan rates are the best since mid June. Lower rates, combined with improving home values, have created a great refinance opportunity

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Mortgage rates ended last week lower for the second week in a row.  On September 26th Freddie Mac reported the average rate for a 30 year fixed rate mortgage was 4.32% with points of 0.7 and 15 year fixed rate mortgages with an average rate of 3.37% also with points of 0.7.  The recent drop in home loan rates has sparked refinance activity including HARP, VA IRRLs and FHA Streamline refinances.  Uncertainty this week may lead to an unpredictable week for rates.

 

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 Highlights from the Freddie Mac survey include:

  • FHA mortgage rates are at a 12-week low
  • VA mortgage rates are a 12-week low
  • Conventional mortgage rates are at a 10-week low

The decision to lock becomes more difficult this week as a likely partial government shutdown will likely play havoc with the financial markets.  Furthermore Ben Bernanke speaks on Wednesday and the unemployment rate will be released on Friday.

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Improved mortgage rates mean it is a good time to buy a home.  These rates have also made refinancing attractive for those who did not refinance in the spring.

Paul Cantor

(804) 719-1515

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News impacting mortgage rates last week was dominated by the Fed’s decision to not start tapering the purchase of bonds.  Other economic data mostly reported weaker than anticipated.  Rates ended the week about 1.5 discount points cheaper than at the end of the previous week.  (This reduction means a$200,000 mortgage at a rate of 4.5% would cost about $3,000 less.)

This week Monday looks to be the quietest day for the markets.   Data to look for later in the week include:  Durable Goods, New Home Sales and Consumer Spending.

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The Fed’s decision to continue the current rate of bond purchases was not a unanimous decision and left the possibility open that tapering may begin later this year.  It is a great time to take advantage of the recent dip in mortgage rates. The tapering issue continues  loom over the financial markets

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The Fed September Surprise:

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Big Day for Mortgage Rates?

We have been waiting for months for today’s Fed decision on tapering Quantitative Easing.  Yesterday’s CPI numbers indicate that inflation remains almost non-existent.  The percentage the employable population actually fully employed is at record lows and the ramifications of Obamacare  are about to be felt by the economy.  Even knowing this  this most economist predict the Fed will begin tapering purchases of both Treasuries and Mortgage Backed Securities.   Since the market has built in an expectation of tapering and if the tapering is concentrated heavily on Treasuries and not MBS, mortgage rates may improve.

 

Paul Cantor

www.paulcantor.info

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Mortgage rates ended last week about 0.75 discount points higher than they were at the start of the week.  Friday’s employment report left financial markets confused.  The countdown to the FOMC meeting and expectations for the start of the Feds tapering of bond purchases on September 18th continues.

This week’s economic news that may impact mortgage rates includes bond auctions, weekly jobless claims, retail sales and wholesale inflation (PPI).

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For now the Fed is continuing to purchase bonds backed by mortgages and home loan rates on conventional, FHA, and VA loans remain at historically low levels.  Given the volatility of the financial markets now is a great time to lock a mortgage rate.

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What's Ahead For Mortgage Rates This Week July 22 2013Mortgage rates improved slightly last week., as economic news was a mixed bag with retail sales and housing starts coming in lower than expected, but home builder confidence in housing markets increased.

Weekly jobless claims fell, and Fed Chair Ben Bernanke testified before the Senate, saying that falling gold prices were an indication of increasing confidence in the economy, but that it was “way too soon” to say when the Fed’s quantitative easing program would be reduced.

 

What’s Coming Up

 

Date Time (ET) Statistic For Market Expects
07/22/13 10:00:00 AM Existing Home Sales Jun 5.28M
07/23/13 01:15:00 PM 2Y Treasury Note Auction ‘- ‘-
07/24/13 10:00:00 AM New Home Sales Jun 481K
07/24/13 01:15:00 PM 5Y Treasury Note Auction    
07/25/13 08:30:00 AM Initial Claims 07/20/13 328K
07/25/13 08:30:00 AM Durable Orders Jun 1.50%
07/25/13 08:30:00 AM Durable Goods -ex transportation Jun 0.40%
07/25/13 01:15:00 PM 7Y Treasury Note Auction ‘- ‘-
07/26/13 09:55:00 AM Michigan Sentiment – Final Jul 84.2

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Affordability remains high for home buyers.  Long term it is expected to see home prices and interest rates to rise; it is a good time to buy a home.

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