Mortgages

What happened to mortgage rates last week?
Rate shoppers caught another break last week as mortgage markets improved on weak jobs data.

The May Non-Farm Payrolls report fell well short of expectations while ongoing jobless claims rose.  The two combined to cast doubt on the speed of the U.S. economic recovery, hurting stocks and helping bonds.

Conforming and FHA mortgage rates dropped for the fifth time in six weeks and, once again, rates are trolling back near all-time lows.

No doubt you’ve heard that before — “mortgage rates at all-time lows”.  Mortgage rates have dipped to these levels four times in the last 19 months. However, on each occasion, it wasn’t long after touching bottom before rates reversed higher.

November 2008 : Roughly 90 minutes
March 2009 : Roughly 6 hours
May 2009 : Roughly 1 day
May 2010 : Roughly 3 hours

What to watch out for this week:
This week, rates could stay low for a matters of hours, or days — we can’t really know. Especially with no “major” data due for release.  Instead, most of this week’s economic news is incidental. That means that mortgage markets will move based on trader sentiment and “gut feel”.

The good news is that the market momentum is currently in the rate shoppers’ favor. We entered the weekend with rates falling and they look poised to open Monday no worse.

Here’s a look at what’s ahead this week:
Wednesday: The Beige Book, a regional economic report from the Fed
Thursday: Initial and continuing jobless claims
Friday: Retail Sales and the Consumer Sentiment report

Market sentiment is a strange animal. One minute it can be your friend and, the next, it can be your enemy. Opinions change swiftly on Wall Street and so do mortgage rates.

If you’re still not locked in, consider making your move. Rates have a lot farther to rise than they do to fall. You won’t want to be on the wrong side of the bet when rates start rising.

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The family business is hockey, but Bob’s business is mortgages. And he wants you as a client. Reach Bob via email at bbowman@perlmortgage.com or call 847.513.6970.

What happened to mortgage rates last week?
Mortgage markets worsened last week as concerned of a global debt crisis lessened and stock markets rebounded. The gains in stocks came at the expense of bonds — including mortgage bonds.

Conforming and FHA mortgage rates rose for the first time in 5 weeks, pulling mortgage pricing off its best levels of the year. The best mortgage rates of last week were locked Tuesday morning.

What to watch out for this week:
This week, mortgage rates may rise even more. In addition to the release of May’s jobs report and consumer confidence data, fears of broader economic slowdown appear to be easing. Day-by-day, the chances of rates rising are real.

On Wednesday, Pending Home Sales and Auto Sales data is released for last month. Both items are “big ticket” and reflect on consumer confidence. Strong readings should be rough on rates.

On Thursday, jobless claims data hits the wires along with worker productivity stats.  Normally, these two releases don’t carry much weight, but with the jobs market in focus this year, markets will be watching for clues about Friday’s big report — the May Non-Farm Payrolls.

Anything can happen when the jobs report is released.

In April, an estimated 290,000 jobs were created and, in May, economists think more than a half-million people re-entered the workforce.  This is good for the economy, of course, but can drag on mortgage rates.  If job growth even comes close to the 500,000 marker, mortgage rates could zoom higher.

Mortgage rates moved higher last week but are still very low. If you’ve been thinking about refinancing your mortgage, you probably shouldn’t put it off much longer.  Reach out to me soon — the longer you wait, the more that rates can rise.

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The family business is hockey, but Bob’s business is mortgages. And he wants you as a client. Reach Bob via email at bbowman@perlmortgage.com or call 847.513.6970.

What happened to mortgage rates last week?
Mortgage markets improved last week — but barely — as ongoing doubt surrounding the health of Greece and the Euro pushed additional investors into safe assets, including mortgage bonds.

Mortgage rates were wildly volatile between Monday and Friday before closing the week slightly better than their best levels of the year.

It’s the 3rd straight week in which mortgage rates improved but that doesn’t necessarily mean the trend for lower rates will continue. The last two times mortgage rates teased these levels, they immediately spiked higher.

It happened once in February 2010, and again, 4 weeks later in March. This week, the same could happen.  After a week-and-a-half without much data of consequence, the newswires will be on overtime.

What to watch out for this week:
On Tuesday, the government releases the Producer Price Index. The Producer Price Index is like a “cost of living” report for U.S. businesses — it measures the change in operating cost from mont-to-month and from year-to-year.

PPI is viewed as a precursor to inflation and inflation is bad for mortgage rates. Therefore, if the Producer Price Index reads higher-than-expected, mortgage rates will rise. If PPI is in-line, rates should hold steady.

Then, on Wednesday, the Consumer Price Index is released. Again, if costs are rising, mortgage rates will likely follow.

The week closes with the release of the Federal Reserve’s minutes from its last meeting in April and the jobs figures.  All in all, a busy week of data and mortgage rates could change by a lot.

If you’re still shopping for the market bottom, luck’s been on your side but there’s a point when it’s best to just lock in.  This week may be that point.  Rates have never stayed this low, for this long, and this week doesn’t figure to be much different.

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The family business is hockey, but Bob’s business is mortgages. And he wants you as a client. Reach Bob via email at bbowman@perlmortgage.com or call 847.513.6970.

What happened to mortgage rates last week?
Mortgage markets improved to their best levels of 2010 last week, aided by events half a world away and ongoing safe haven buying.  Greece’s debt problems continue to help mortgage rate shoppers around the country.

Conventional mortgage rates dropped last week, ARMs falling more than fixed. FHA mortgage rates also improved.

Global concern for the Greece Situation is so strong that markets even shrugged off April’s blowout job report. On most other days, mortgage rates would soar on better-than-expected jobs data — especially coming out of a recession.

The Department of Labor’s April Non-Farm Payrolls reports:
* Payrolls have been net positive for 4 straight months
* Nearly 600,000 jobs have been created thus far in 2010
* Monthly job growth posted its biggest gain in 4 years in April

Additionally, more than 800,000 Americans re-entered the workforce in April in search of work.  As a result, the Unemployment Rate jumped by 0.2 percent — another positive sign (in a roundabout way).

But again…Wall Street wasn’t watching jobs, they were watching Greece. And Greece was in riot.

What to watch out for this week:
This week, without much new data due on the economy, mortgage markets should continue to take cues from Greece, the IMF and the Eurozone.  If a bailout agreement can be reached that investors feel is effective, the safe haven buying that’s led rates lower will recede and mortgage rates should rise.

Conversely, if an agreement is reached that investors deem ineffective, or no agreement is reached at all, mortgage rates should drop.

Each week for the last four weeks, we’ve talked about Greece and its pending bailout and how it might impact rates because each week the bailout appears imminent.  Even this week, the market opens with the news that the IMF has approved a $40 billion lifeline to Greece.  Maybe this will be the news that finally turns the mortgage market around.

Mortgage rates are unnaturally low right now and should change direction quickly. The problem is nobody knows when that will happen so be careful when rate shopping and keep an eye on the market.

Mortgage rates may fall further, but when they turn higher, they’re going to turn quickly.

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The family business is hockey, but Bob’s business is mortgages. And he wants you as a client. Reach Bob via email at bbowman@perlmortgage.com or call 847.513.6970.

More Economic Growth:
Initial Jobless Claims fell for the first time in three weeks as new filings for state unemployment benefits dropped 24,000.  Many market analysts expect that we will continue to see improvement in the labor market over the coming weeks.

Durable Goods Orders (long-lasting U.S. manufactured goods – for example: an oven) moved upward sharply.  Orders for items (excluding transportation and defense) jumped 2.8% last month.  This is the largest rise since December 2007.  This coincides with the very strong manufacturing data that we have been seeing.  This shows that personal and business consumption is on the rise and is very good news for the economy.

What happened to mortgage rates last week?
Mortgage markets worsened last week in see-saw trading. By the time Friday’s market closed, mortgage rates were higher across the board — ARMs, fixed rates, FHA and conventional.

The biggest stories of last week were actually non-stories.

First, the ash cloud from Iceland’s Eyjafjallajökull volcano dissipated, allowing warehouses to move inventory, airlines to move people, and businesses to move product.  In addition, Greece moved closer to securing emergency funding that will help it stave off default.

When these two issues were threats earlier in the month, mortgage bonds rallied on safe haven buying, driving rates down. As the threats lessened over the course of last week, however, mortgage bonds sold off and mortgage rates rose.

What to watch out for this week:
By contrast, this week features lots of stories. Economic data will be at the forefront, as will the Federal Reserve which meets for one of its 8 scheduled meetings of the year.

Monday : Greece is expected to announce an aid package
Tuesday : Case-Shiller Index reports on home values from February
Wednesday : Fed adjourns from its 2-day meeting
Thursday : Initial Unemployment Claims are released
Friday : GDP and consumer confidence numbers are released

Furthermore, Wall Street will have its eye on the Senate’s questioning of key Goldman Sachs employees in the wake of the SEC’s fraud charge.

In general, news that’s “good” for the U.S. economy will be bad for mortgage rates, and vice verse.  And with mortgage rates changing as quickly as they have been, rates could really rise in a hurry.

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The family business is hockey, but Bob’s business is mortgages. And he wants you as a client. Reach Bob via email at bbowman@perlmortgage.com or call 847.513.6970.