What's Ahead For Mortgage Rates This Week - February 24, 2014

Last week's economic data supported recent reports indicating that housing markets are slowing, The National Association of Home builders/Wells Fargo Home Builders Index (HBI) dropped by 10 points to a reading of 46 for February.

Home builder confidence dropped to its lowest reading in nine months,  and fell below the benchmark of 50, which indicates that more builders are pessimistic about current market conditions than not.

Severe weather was blamed for the lower builder confidence reading, which fell below the expected reading of 56.

Regional readings of builder confidence were also lower:

• Northeast: Builder confidence fell from 41 to 33 points. This suggests that weather is a major concern as this area has experienced a series of nasty winter storms.

• South: The HBI reading fell from 50 in January to 46 in February and was the smallest decline among the four regions. Fewer index points lost in the South appears to support builder's concerns about bad weather in other regions.

• Midwest: Builder confidence dropped from 59 points to a reading of 50.

• West: Builder confidence fell by 14 points to February's reading of 57. Desirable areas in the West had been leading the nation in home price appreciation. February's reading may signal an easing of buyer enthusiasm as rapidly rising home prices have reduced affordable options for first-time and moderate income buyers.

Builders also cited concerns over labor and supplies as reasons for lower confidence readings.

Housing Starts Lower, Mortgage Rates Higher

On Wednesday, Housing Starts for January were released. Although analysts predicted a figure of 945,000 housing starts as compared to an upwardly adjusted 1.05 million housing starts in December, only 880,000 housing starts were reported for January.

The Department of Commerce also cited extreme winter weather as a cause for the drop in housing starts, which reached their fastest pace since 2008 in November. There is some good news. Economists said that housing starts delayed during winter could begin during spring.

According to Freddie Mac's weekly survey, average mortgage rates rose across the board. The rate for a 30-year fixed rate loan rose by 5 basis points to 4.33 percent. The average rate for a 15-year fixed rate mortgage rose by two basis points to 3.35 percent.

The average rate for a 5/1 adjustable rate mortgage moved up by three basis points to an average rate of 3.08 percent. Discount points for all three products were unchanged with readings of 0.70 for 30-year and 15-year fixed rate mortgages and 0.50 percent discount points for 5/1 adjustable rate mortgages.

The Bureau of Labor Statistics reported that weekly jobless claims came in at 336,000 against expectations of 335,000 new jobless claims. The prior week's reading was for 339,000 new jobless claims. Analysts said that job growth may be slowing after last year's growth, but also noted that winter weather had slowed hiring in labor sectors such as construction and manufacturing.

Existing home sales fell by 5.10 percent in January according to the National Association of REALTORS®, which reported a seasonally-adjusted annual rate of home sales at 4.62 million sales against expectations of 4.65 million and December's reading of 4.87 million sales of pre-owned homes. The national average home price rose to $188,900, which was 10.70 percent higher year-over-year.

January's inventory of available existing homes was 1.9 million homes; this represented a 4.90 month supply of existing homes for sale. Real estate pros prefer to see at least a six month inventory of available homes for sale.

What's Ahead

Next week brings a series of economic reports and opportunities for good news. The Case Shiller Home Price Indices, FHFA Home Price Index will be released. Consumer Confidence and the University of Michigan's Consumer Sentiment report along with New and Pending Home Sales reports round out next week's scheduled news.

A Look At This Week's Mortgage Rates : December 3, 2012

Low mortgage rates are pumping up home affordability.

Average 30-year fixed-rate mortgage rates made a new all-time low in November, continuing this year Refinance Boom and giving fuel to the budding housing market recovery.

At month-end, Freddie Mac's survey of 125 banks nationwide put the benchmark product's rate at 3.32% for borrowers willing to pay 0.8 discount points. This is just 0.01 percentage point above the record-low rate establishing prior to Thanksgiving.

The 15-year fixed mortgage is similarly low, posting 2.64 percent nationwide, on average. This, too, is only slightly higher the all-time low set the week prior.

Falling mortgage rates have helped to offset rising home prices in many U.S. cities. 

Steady job creation and rising consumer confidence has swelled the pool of home buyers nationwide, causing home inventories to shrink and home prices to rise. The improving economy has also led to rising rents and now, within many housing markets, it's less costly to buy and own a home than to rent a comparable one.

A $1,000 mortgage payment affords a $225,000 mortgage payment in Maple Grove.

Last week, the economy was shown to be improving.

• The Commerce Department showed that the Gross Domestic Product increased at a 2.7% annual rate in Q3 2012
• The Labor Department showed first-time unemployment filings dropping by 23,000 claims
• The Pending Home Sales Index jumped to its highest point since April 2010
• The Existing Home Sales report showed home sales up 2.1%
• The Case-Shiller Index showed home values making annual gains 

In addition, Federal Reserve Ben Bernanke said that the central bank will take action to speed economic growth, should the U.S. economy start to side-step. 

This week, there is little on the U.S. economic calendar, save for Friday's Non-Farm Payrolls report. Wall Street is expecting to see 80,000 net new jobs created in November, and a rise in the national Unemployment Rate to 8.0%.

If the report's actual results are stronger-than-expected, mortgage rates will likely climb from their all-time lows. If the report comes back weak, rates should stay unchanged.

Mortgage Rates Spike On Strong Retail Sales Data. Could 4 Percent Rates Be Done?

If consumer spending is a key to economic recovery, the nation is on its way.

Monday, the Census Bureau released national Retail Sales figures for October and, for the second straight month, the data surged past expectation. Last month's retail figures jumped 1.2 percent -- the largest monthly jump since March -- as total sales receipts climbed to a 2-year high.

Consumer confidence is rising, too. Though still below the long-term trend, confidence in the future up-ticked in October.

The current confidence reading is now double the low-point from February 2009.

It's no surprise that both Retail Sales and Consumer Confidence are higher. They correlate in a common-sense-type manner. When consumers are more confident in the economy, they're more likely to spend their money. This, in turn, leads to more purchases and rising retail receipts.

Unfortunately, for home buyers and rate shoppers in Plymouth , it also leads to rising mortgage rates.

Because consumer spending accounts for two-thirds of the economy, spending growth leads to economic growth. But it's been a lack of growth that's kept mortgage rates this low.

When the growth starts, the low rates end. It's why mortgage rates have added as much as 1/2 percent over the past 10 days. Consider the recent "good news":

• Retail Sales made a 2-year high in October
• Existing and New Home Sales showed big improvement in September
• Jobs growth returned in October

The days of 4 percent, 30-year fixed rate mortgages may be nearing its end.  If you're still floating a mortgage rate or thinking of buying or refinancing, consider the impact of rising rates on your budget.

The time to act may be sooner than you had planned.

What's Ahead For Mortgage Rates This Week : October 4, 2010

For the third straight week, mortgage markets showed little conviction in the face of contrasting data. Mortgage bonds ended the week slightly better, but mortgage rates did not.

Conforming mortgage rates in Wisconsin were up-and-down all week before ending the week with a slight worsening. The inter-day volatility has come to characterize the current mortgage market.

In part, rates are jumpy because of data; it's unclear when the economy is expanding or contraction -- despite the "official call" of the recession's end in June 2009.

Consider the conflicting reports from last week. Separate Consumer Confidence reports showed sentiment falling in September, but on the other hand:

• Initial jobless claims dropped 3%
• Household income is shown to be rising
• GDP is improving year-over-year

In other words, the economy is in recovery, but the average Plymouth citizen isn't believing it. That causes purse-strings to stay tight, thereby retarding economic growth.

Wall Street is struggling with the contrast, and constantly changing its outlook.  It's making mortgage rates tough to pin down and this week should reflect that. In addition to a home sales report and new consumer confidence data, the government prints its market-moving Non-Farm Payrolls report.

More commonly called "the jobs report", Non-Farm Payrolls details the workforce, its size, and its Unemployment Rate.  There's expected to be little change from August, a month considered "fair" by recent employment standards. If the jobs report shows improvement and/or strength, look for mortgage rates to rise. If the report does deterioration and/or weakness, look for mortgage rates to fall.

The Non-Farm Payrolls will be released Friday at 8:30 AM ET.

What's Ahead For Mortgage Rates This Week : June 1, 2010

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 in Wisconsin 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.

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 Tuesday, a consumer confidence survey is released. Consumer confidence is linked to economic growth because 70 percent of the economy is based in consumer spending. In theory, as consumer confidence grows, the economy should, too. 

Therefore, a strong reading should push mortgage rates higher.

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

Next, 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.  Talk to your loan officer today -- the longer you wait, the more that rates can rise.

What's Ahead For Mortgage Rates This Week : March 1, 2010

Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat.

Mortgage rates are now at their lowest levels since early-February.

Last week was heavy on negative data:

• Consumer Confidence posted 16% short of expectations
• New Home Sales posted 13% short of expectations
• Initial Jobless Claims were higher than expected

In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector.

The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy.

Bernanke stayed on message -- the Fed Funds Rate will stay low for an extended period of time.

Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall.

This week, mortgage rates will jockey around Friday's Non-Farm Payrolls report.

Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February.  If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it's worse, rates will rise.

Other important data this week include Personal Consumption Expenditures -- the Fed's preferred inflation gauge -- plus the Fed's Beige Book release.  Mortgage rates remain in flux so float with caution.

Mortgage rates look good today, but by Friday, they could be much, much worse.

How Rising Consumer Sentiment Is Linked To Higher Home Prices

Consumer Sentiment has been on the rise since last February and it's something to which Minneapolis home buyers should pay attention. 

The affordability of your next home may hinge on consumer confidence.

As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place.  Business investment is returning, household spending is expanding, and financial systems are gaining strength. 

Consumer confidence is at a 2-year high.

What's missing from the recovery, though, is jobs growth.  Another net 20,000 jobs were lost in January. Data like that hinders economic growth.

That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it's still a net negative number.  Not only does household income drop when Americans lose jobs but so does the average American's confidence in his or her own economic future.

This is one reason why jobs growth is so closely watched by Wall Street -- jobs are linked to higher confidence levels which, in turn, is believed to spur consumer spending.

Consumer spending represents 70% of the U.S. economy.

As confidence rises, it could be good news for the economy, but bad news for home buyers. More spending expands the economy and, all things equal, that leads mortgage rates higher. 

Same for home prices. More confidence means more buyers which, in turn, squeezes the supply-and-demand curve in favor of sellers.

Later this morning, the University of Michigan will release its February Consumer Sentiment survey. If the reading is higher-than-expected, prepare for mortgage rates to rise and home affordability to worsen.

What's Ahead For Mortgage Rates This Week : January 11, 2010

Data was sparse through 2010's first trading week last week, setting the stage for a week of momentum trading.

In up-and-down trading, mortgage pricing improved overall but the best rates of the week didn't last long.

Rates improved Monday and Tuesday as an oversold market corrected itself to better price points.  Then, in anticipation of the December jobs report, rates worsened Wednesday and Thursday.  Friday, after the jobs report was released, pricing proceeded to carve out a huge range before settling unchanged.

On average, lenders issued new rate sheets every few hours last week. It was a difficult week to shop for mortgages in Minnesota and elsewhere.

Unfortunately, this week doesn't figure to be much better. 

For the second straight week, the economic calendar is bare.  Traders -- like last week -- will be forced to rely on "gut feel" to make their trades.  That rarely bodes well for shoppers.  Especially because traders are facing a mortgage market in the midst of a terrible losing streak. 

Since reaching an all-time low December 1, 2009, 30-year fixed rate mortgages have worsened by 300 basis points, or 3 percent.

To a homeowner or rate shopper in Minneapolis , the math of 300 basis points looks like this:

• 5 weeks ago, a 4.625 percent mortgage rate required 0 points
• Today, the same 4.625 percent mortgage rate requires 3 points

1 point is equal to 1 percent of your loan size.

Last month's worsening is the worst 1-month deterioration in consumer mortgage rates from all of 2009.

If you're hoping for rates to fall back to early-December levels, know that it is possible. For this week, here's some things that could push rates in the right direction:

1. 3 Fed members are speaking. Each mention of economic under-performance in 2010 will be good for rates.
2. Retail Sales data is released Thursday. If the numbers are weak, mortgage rates should improve.
3. Consumer confidence surveys are released Friday. Lower confidence levels should help rates fall.

Be ready to lock at a moment's notice this week.  Rates may rise or fall, but markets are positioned toward the former.That's where momentum is pointing as of the Market Open today.

Keep an eye on rates and your loan officer on speed dial. Once the mortgage market starts breaking, it's expected to break quickly.