What's Ahead For Mortgage Rates This Week - June 17, 2013

Last week's news was relatively quiet with no data significant to the mortgage lending released until Wednesday, when the federal government announced a $138 billion budget deficit for May.

According to the U.S. Treasury this figure is 11 percent higher than for May of 2012, but the federal budget is expected to come in with less than a -$1 trillion deficit for the 2013 fiscal year, which runs from October to September.

The Treasury estimates that the 2013 budget deficit will come in at approximately -$642 billion, well below fiscal 2012's deficit of -$1.1 trillion. The federal budget has been running deficits over -$1 trillion since 2008.

Employment Market Continues To Strengthen

On Thursday, the Weekly Jobless Claims report brought good news; jobless claims fell from the prior week's 346,000 jobless claims to 334,000 jobless claims. This was also less than expectations of 350,000 jobless claims. As more workers gain steady employment, this will enable more would-be home buyers to become active buyers.

May Retail sales also showed slight improvement as they moved from 0.60 percent from April's 0.10 percent.

According to Freddie Mac's Primary Mortgage Market Survey (PMMS), the average mortgage rate for a 30year fixed rate mortgage rose from last week's 3.91 percent to 3.98 percent with discount points unchanged at 0.70 percent. The average rate for a 15-year fixed rate mortgage rose from last week's 3.03 percent to 3.10 percent with discount points holding at 0.70 percent.

What's Coming Up This Week

Next week's economic news schedule has a number of reports due including Wednesday's FOMC statement and Fed Chair Ben Bernanke's press conference. This meeting and press conference are significant as any move by the Fed to reduce or cease its current quantitative easing (QE) program could cause mortgage rates to rise further.

Monday's news includes the Home Builders Index for June. Tuesday brings the Consumer Price Index (CPI) for May and the Core CPI, also for May. The indices measure prices paid by consumers for goods and services; the Core CPI eliminates the volatile food and energy sectors included in the CPI. Rising or falling consumer costs influence how much discretionary income consumers have for saving toward buying a home.

No news is scheduled for Wednesday other than the FOMC statement and press conference.

Thursday brings the Existing Home Sales Report, Weekly Jobs Report, Freddie Mac PMMS and Leading Indicators. These reports are expected to provide news about U.S. housing markets, mortgage rates and economic influences impacting consumers.

There is no economic news scheduled for Friday.

What's Ahead For Mortgage Rates This Week -- June 10, 2013

Last week's economic reports provided a mixed bag of results. On Monday, the Department of Commerce reported that construction spending increased by 0.40 percent in April and fell shy of the expected reading of 1.0 percent, but exceeded the March reading of -0.80 percent.

Home Prices Increase Fastest Since 2006

On Tuesday, CoreLogic released its Home Prices reported that the national average home price had increased by 12.10 percent year-over-year in April. The comparable year-over-year reading for April 2012 was 11.00 percent. This represents the fastest pace of home price increases since 2006.

The national average home price expanded by 3.20 percent as compared to March,  but average prices grew faster in the West, which is experiencing a pronounced lack of available homes and developed land for building.

New Jobs Created Showing Improvement Over April Revisions 

ADP released its private-sector Payrolls Report for May on Wednesday; 135,000 new private sector jobs were added as compared to investor expectations of 170,000 jobs added in May. The May reading surpassed April's downwardly-revised reading of private-sector jobs added.

Friday's Jobs Report, issued by the Bureau of Labor Statistics, consists of the Non-Farm Payrolls Report and the National Unemployment Rate. Non-Farm Payrolls added 175,000 public and private sector jobs and surpassed both the consensus reading of 164,000 new jobs and the prior week's reading of 149,000 jobs added. The National Unemployment Rate ticked up from 7.50 to 7.60 percent. The Department of Labor attributes this increase to more people joining or returning to the labor market.

Investors Watching Fed Mortgage Backed Security Buying Activity Closely

The Federal Reserve Beige Book Report was also released Wednesday. It contained no surprises and noted modest to moderate economic growth in 11 of 12 Federal Reserve Districts. The Dallas Federal Reserve District reported strong growth, but investors will be watching next week's Federal Open Market Committee (FOMC) meeting closely for proposed changes to the Fed's current policy of buying bonds and mortgage backed securities (MBS) with the goal of keeping long term interest rates lower.

Thursday's Primary Mortgage Market Survey brought disquieting news of rising mortgage rates. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage had risen from the prior week's rate of 3.81 percent to 3.91 percent. Discount points fell slightly from 0.80 percent to 0.70 percent with buyers paying all of their closing costs. The average rate for a 15-year fixed rate mortgage rose from last week's average rate of 2.98 percent to 3.03 percent with discount rates remaining the same at 0.70 percent for buyers paying all of their closing costs.

What's Ahead for Next Week

There is no news scheduled for release on Monday. The rest of the week's calendar includes the NFIB Small Business Index on Tuesday and the Federal Budget for May on Wednesday. Thursday's scheduled releases include Weekly Jobless Claims, Average weekly mortgage rates as reported by Freddie Mac, and Retail Sales for May. Friday's schedule includes the Producer's Price Index for May and June's Consumer Sentiment Report.

3 Critical Tips To Improve Your Credit Score And Mortgage Terms

When you are looking for a mortgage for your home, your credit score is very important. Any potential lender will check your score and will use the number to assess your creditworthiness and the interest rate that they offer you.

The better your credit score the lower the mortgage interest rates will be available to you, as the lender will be able to see that you can handle credit well.

However, if you have a very bad credit score, it could be causing you to be offered high interest rates on your mortgage that could cost you thousands over the years.

Improving your credit score before searching for a mortgage will ensure that you get the best rate possible. But what can you do to improve your credit score?

Here are three tips that can help you improve your credit score and your mortgage loan:

Be Patient

Remember that improving your bad credit will be a little bit like losing weight. You might not see results right away but it is the long term benefit of your good habits that will make all the difference.

When it comes to all of the ways to improve your credit score, there are no quick-fixes and the best way to rebuild your credit is to be responsible over time.

Check Your Credit Report For Errors

If you don't know precisely what your credit score currently is, the first step will be for you to obtain a credit report. You can request a free copy of your credit report and check it over carefully for errors. There might be an error on the report that is making your score appear worse than it should be.

Set Up Payment Reminders

If you have trouble remembering to make your credit payments by the due date, this can be one of the biggest negative factors bringing down your score. You can ask your bank to set up convenient reminders through the online banking portals so that you will receive an email or a text whenever your payments are due.

Your credit score is very important when looking for a Stillwater home mortgage, as it will mean that you receive much better program options and interest rates. Keep these tips in mind so that you can enjoy the best rates possible on your mortgage.

For more tips on how to improve your prospects for the best mortgage, feel free to contact your local, trusted mortgage professional.

What's Ahead For Mortgage Rates This Week -- June 3, 2013

Last week’s financial news was relatively limited due to the Memorial Day holiday and no economic reports being released on Wednesday.

The biggest news in terms of housing and mortgages was the S&P/Case-Shiller Housing Market Indices (HMI) released on Tuesday.

The March HMI data for national housing markets reflected a sharp increase in year-over-year home prices from 9.30 percent in February to 10.90 percent in March.

Twelve cities included in the Case-Shiller 20-city index reported double-digit year-over-year percentage gains for March home prices. While this data strongly supports recovering home prices, analysts cite the need for more jobs, which would enable more consumers to buy homes.

Thursday’s weekly Jobless Claims Report from the Labor Department highlighted ongoing problems with lagging employment as new jobless claims jumped to 354,000. The four-week moving average for new jobless claims increased by 6.75 percent to 347,250 new jobless claims.

Bullish Stock Market Affects Mortgage Interest Rates

Mortgage rates jumped in connection rising stock prices; Freddie Mac reported that the average rate for a 30-year fixed rate mortgage increased to 3.81 percent plus 0.80 percent in discount points.  The average rate for a 15-year fixed rate mortgage increased to 2.98 percent plus 0.70 percent in discount points.

Rising mortgage rates suggest that home buyers may benefit from considering hybrid adjustable rate mortgages; the average rate for a 5/1 hybrid ARM was 2.66 percent with 0.50 percent in discount points.

The Chicago Purchasing Managers Index (Chicago PMI) measures how manufacturing and related businesses perform on a monthly basis.  May’s reading increased to 58.70 and surpassed expectations of a 49.90 reading as well as April’s reading of 49.00. Readings above 50 are considered positive.

Consumer Sentiment rose in May to a reading of 84.50, which exceeded both the expected reading of 83.80 and April’s reading of 83.70. As consumers gain confidence in the economy, they are more likely to buy homes.

Next Week’s News

Construction spending for April is due Monday with a consensus of +1.00 percent as compared to -1.70 percent in March. Rising construction spending could indicate an increase in residential construction, which has been facing obstacles including increasing labor and material costs and a shortage of available land for residential building.

Thursday’s news includes the weekly Jobless Claims report and Freddie Mac’s weekly report of average mortgage rates.

Friday brings the monthly Jobs Report, which consists of the Department of Labor’s Non-farm Payrolls report and the monthly unemployment rate. These reports are significant for gauging national and regional labor markets and for anticipating the Fed’s decision regarding its current quantitative easing policy.

If the Fed ceases or reduces its purchase of Treasury securities and mortgage-backed securities (MBS), mortgage rates are likely to rise.

What's Ahead For Mortgage Rates This Week - May 20, 2013

Last week was jam-packed with economic news; here are some highlights with emphasis on housing and mortgage related news:

Monday: Retail sales for April increased to -0.1 percent from the March reading of -0.5 percent and also surpassed Wall Street's downward forecast of -0.6 percent. Retail sales are important to economic recovery as sales of goods and services represent approximately 70 percent of the U.S. economy.

Tuesday: The National Federation of Independent Business (NFIB) released its Small Business Optimism Index for April with encouraging results. April's index rose by 2.6 points to 92.1. A reading of 90.7 indicates economic recovery. This index is based on a survey of 1873 NFIB member businesses.

Wednesday: The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for May matched investor expectations with a reading of 44. At three points above the March reading of 41, this report suggests that builders are slowly gaining confidence in national housing markets. 

Thursday: The U.S. Commerce Department reported that Housing Starts fell by 16.5 percent in April to a seasonally-adjusted annual level of 853,000 from 1.02 million housing starts in March. This reading fell short of investors' consensus of 965,000 housing starts, however, this decrease was caused by the volatile apartment construction sector.

Friday: Consumer sentiment for May surpassed investor expectations of +0.3 percent and came in at +0.6 percent. As consumer sentiment improves, it's likely that more consumers will buy homes.

Rising Interest Rates Show Strengthening Economy

Mortgage rates rose last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose from 3.42 percent to 3.51 percent with borrowers paying 0.70 in discount points and all of their closing costs.

15-year fixed rate mortgages rose from 2.61 percent last week to 2.69 percent this week with borrowers paying 0.70 in discount points and all of their closing costs.

This news is consistent with a strengthening economy, but is narrowing opportunities for home buyers seeking both affordable home prices and low mortgage rates.

Federal Open Market Committee Minutes To Be Released This Week

Looking ahead, economic news for this week includes the Existing Home Sales report for April with an expectation of 5.00 million homes sold on a seasonally-adjusted annual basis against the March tally of 4.93 million homes sold.

Also set for release on Wednesday are the Federal Open Market Committee (FOMC) Minutes for the meeting held April 30 and May 1. The FOMC meetings typically include discussions of the Federal Reserve's current policy on quantitative easing (QE) which consists of the Fed buying $85 billion per month in MBS and treasury bonds.

When the QE program ends, mortgage rates will likely increase as bond prices decline due to lesser demand.

Thursday brings the weekly Jobless Claims Report along with New Home Sales for April. The consensus for new homes sold is 430,000 as compared to the March reading of 417,000 new homes sold.

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, will release its Home Price Index for March on Thursday. 

What's Ahead For Mortgage Rates This Week - May 13, 2013

Mortgage rates rose last week with average rates a 30-year fixed rate mortgage rising from last week's 3.35 percent to 3.42 percent with buyers paying all closing costs and 0.7 percent in discount points.

Average rates for a 15-year fixed rate mortgage rose from 2.56 percent to 2.61 percent with buyers paying their closing costs and 0.7 percent in discount points.

Freddie Mac also reports that average rates for a 5/1 adjustable rate mortgage rose from 2.56 percent last week to 2.58 percent with buyers paying their closing costs and 0.5 percent in discount points. 

Here are noteworthy points from last week's economic news:

Monday:  In spite of improving economic conditions, a majority of participants in the Senior Loan Officer Opinion Survey on Bank Lending Practices indicated that their lending institutions would not be relaxing residential mortgage lending standards. Lenders perceive a significant risk in terms of being required to absorb losses incurred on defaulted mortgage loans. 

Mortgage owners including Fannie Mae and Freddie Mac, along with mortgage insurance companies can require mortgage lenders to buy back defaulted loans or make them whole for losses related to foreclosed and otherwise defaulted mortgage loans.

Tuesday: CoreLogic reported an increase of 1.9 percent in national home prices for March. This news represents the 13th consecutive increase and a year-over-year increase of 10.5 percent.

Home prices were boosted by strong increases in the West; Nevada posted a 22.2 percent gain from last March and California posted a 17.2 percent year-over-year gain. 

CoreLogic predicted a year-over-year increase of 9.6 percent for home prices for April, with a monthly increase of 1.3 percent increase expected between March and April.

Thursday: Weekly jobless claims brought good news as they came in at 323,000; this was lower than expectations of 335,000 new jobless claims and the 327,000 new jobless claims reported in the prior week.

Friday: The Treasury Department reported that the federal budget has a surplus of + $113 billion for April. This was $54 billion higher than for April 2012 and the highest monthly surplus since April, 2008.

Increasing home values and federal budget surpluses, along with falling consumer debt pointed the way toward overall as well as personal economic recovery last week.

What's Coming Up 

This week brings a couple important economic reports affecting the real estate industry including the Home Builders Index on Wednesday and the Weekly Jobless Claims and Housing Starts numbers released on Thursday.

The Consumer Sentiment and Leading Indicators reports will round out the week on Friday. Consumer Sentiment is important in terms of housing markets and mortgage lending; consumers typically don't buy homes or move up to a larger home if they aren't feeling secure about economic conditions. 

This week's economic data may provide further evidence of a stronger U.S. economy as well as a snapshot of retail spending and consumer costs.

What's Ahead For Mortgage Rates This Week - May 6, 2013

Mortgage rates fell last week and approached or reached record low levels.

According to Freddie Mac, the average rate for a 30-year fixed rate mortgage (FRM) fell from 3.40 percent to 3.35 percent. Average rates for a 15-year FRM moved from 2.61percent to 2.56 percent.

Average rates for a 5/1 adjustable rate mortgage (ARM) fell to 2.56 from last week's average of 2.58 percent Discount points for last week's mortgage rates ranged from 0.7percent for 30 and 15 year FRM loans to 0.5 percent for a 5/1 ARM.

Rock-bottom mortgage rates can offset the impact of rising home prices.

Last Week Was A Strong Showing For The US Economy

Last week's economic news provided further indications of economic recovery, with housing related reports contributing to overall confidence in a stronger economy.

Highlights of last week's news include:

Monday: Pending home sales moved up to 1.50 percent in March from February's -1.07 percent. This reading also surpassed Wall Street's forecast of 0.90 percent for March.

Tuesday: The Case-Shiller Home Price Index for February reported that the national average home price had increased by 9.3 percent year-over-year between February 2012 and February 2013. By comparison, the average national home price between January 2012 and January 2013 increased by 8.1 percent year-over-year. Rising home prices are contributing to the economic recovery, but in some areas demand for homes exceeds supply, which also contributes to rising home prices.

Wednesday: The Federal Open Market Committee (FOMC) issued its scheduled statement after its meeting concluded. Committee members noted signs of an improving economy, and cited housing markets as a leading contributor to the recovery. The FOMC statement also indicated that economic conditions were not sufficiently improved for the FOMC to change or cease the Federal Reserve's quantitative easing policy. The Fed's goal for its current quantitative easing program is keeping long-term interest rates including mortgage rates low.

Thursday: The weekly Jobless Claims Report brought better-than-expected news with new jobless claims coming in at 324,000, less than the expected reading of 345,000 new jobless claims and also higher than the previous report's reading of 342,000 new jobless claims.

Friday: The Bureau of Labor Statistics issued its monthly “Jobs Report,” which consists of the Non-farm Payrolls Report and the national Unemployment Rate. Again new jobs added exceeded expectations for April with 165,000 jobs added against expectations of 135,000 new jobs added. April's reading also surpassed the March reading of 138,000 new jobs.

The unemployment rate dropped to 7.5 percent as compared to a consensus of 7.6 percent and last month's reading of 7.6 percent. To put this reading in perspective, the FOMC has targeted an unemployment rate of 6.5 percent as a benchmark for adjusting its current policies including quantitative easing.

What To Look For This Week

This week's economic events include latest Jobless Claims report on Thursday. It will be interesting to see if this week's reading will be lower than last week's reading of 324,000 new jobless claims.

On Friday, the Federal Budget will be released; this could influence financial markets depending on what programs and services are cut or reduced.

What's Ahead For Mortgage Rates This Week - April 29, 2013

Mortgage rates fell again last week and are again near record lows.

According to Freddie Mac, the average rate for a 15-year fixed rate mortgage did achieve a record low of 2.61 percent as compared to 3.1 percent one year ago.

The average rate for a 30-year fixed rate mortgage fell to 3.40 percent and near the record low of 3.31 percent.

Low mortgage rates are helping homeowners with refinancing and are boosting housing markets as more buyers can qualify for mortgage loans.

Home Values Continue To Rise

Last week's economic news was mixed; The Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae, released its Home Price Index for February.

According to this index, home prices increased by 0.7 percent between January and February, and increased by 7.1 percent year-over-year on a seasonally adjusted annual basis.

According to the National Association of REALTORS®, existing home sales for March fell short of the expected 5.03 million and came in at 4.92 million existing homes sold on a seasonally adjusted annual basis.

This reading was also 0.7 percent shy of February's reading of 4.95 million existing homes sold.

Some homeowners may be taking a wait-and-see stance as they wait for home values to continue rising.

Employment Numbers Gaining Steam

Weekly jobless claims fell to 339,000 and were short of the consensus of 351,000 and the prior week's 355,000 jobless claims filed.

As more workers gain employment, those able to buy homes increases.

The economy in general also benefits as households gain income they can use for purchasing goods and services.

Consumer Sentiment rose by 2.1 points to 76.4 over the March reading of 72.3 percent.

April's reading also surpassed expectations of 74.0 percent.

As consumers gain confidence in the economy, they are generally more likely to buy homes and make other major purchases that contribute to the U.S. economy.

Coming Up this Week

This week's economic news calendar includes several reports that impact the housing sector as well as the general economy:

• Monday: Personal Income, Consumer Spending and Pending Home Sales reports are due for release.

• Tuesday: The Case Shiller/Wells Fargo Home Price Index for February and Consumer Confidence for April will provide data concerning national and regional home prices and indicate how consumers view the economy.

• Wednesday: The customary statement by the Federal Open Market Committee (FOMC) is set for release at the conclusion of its meeting. The ADP Employment Index for April and Construction Spending for March provide data on jobs and trends in construction spending.

• Thursday: Weekly Jobless Claims report

• Friday: The Non-farm Payrolls Report and Unemployment Rate for April, collectively known as the Jobs Report, will be released.

While we can't predict what will happen with mortgage rates, some industry analysts indicated that they expect rates to remain low in the near-term.

These lower rates should continue to support growth in the Stillwater real estate market for homebuyers and sellers as well as those looking to refinance their home.

What's Ahead For Mortgage Rates This Week - April 22, 2013

Mortgage rates fell for the third consecutive week.

According to Freddie Mac, the average rate for a 30-year fixed rate mortgage fell by two basis points to 3.41 percent as compared to last week's 3.43 percent and 3.90 percent year-over-year.

The average rate for a 15-year fixed rate mortgage was 2.64 percent as compared to last week's 2.65 percent and 3.13 percent year-over-year.

Falling mortgage rates were attributed to reduced consumer spending.

Last week's economic news includes the NAHB Wells Fargo Housing Market Index (HMI), with a reading of 42 for March.

This is four points below investor expectations and two points below February's results.

A reading of 50 or above indicates that more of the builders surveyed have a positive outlook.

March results were impacted by builder concerns over tight builder credit, a lack of available lots and increasing construction costs.

Housing Starts Increased In March

More good news for housing arrived Tuesday when the U.S. Department of Commerce issued its monthly Housing Starts report.

Housing starts for March came in higher than anticipated at a seasonally adjusted annual rate of 1.04 million, against a consensus of 933,000 and also beat February's reported 968,000 housing starts.

Housing starts rose by 7 percent over February, and rose 47 percent over March 2012, the highest year-to-year increase since 1992.

The Federal Reserve issued its Beige Book Report which is compiled from reports by the 12 districts of the Federal Reserve.

5 districts reported moderate economic growth, 5 districts reported modest growth, and 2 reported slight economic growth.

Based on the data contained in the Beige Book Report, economists are not expecting the Fed to make changes to its current quantitative easing (QE) program of purchasing $85 billion monthly in bonds and MBS; this may help mortgage rates remain steady; when MBS prices fall, mortgage rates typically rise.

What's Coming Up Next

The National Association of REALTORS® releases its Existing Home Sales report for March today.

The consensus is for 5.03 million homes sold on a seasonally adjusted annual basis, and against February's 4.98 million existing homes sold. 

Tuesday brings more housing news with the FHFA Home Price Index for February; FHFA is the federal agency overseeing Fannie Mae and Freddie Mac.

The U.S. Department of Commerce releases its New Home Sales for March on Tuesday.

The consensus is 421,000 new homes sold against February's reading of 411,000 new homes sold.

Thursday's Weekly Jobless claims are expected to come in at 351,000 as compared to last week's 352,000.

Employment is a key factor in terms of consumers buying homes and qualifying for mortgage loans

What's Ahead For Mortgage Rates This Week - April 15, 2013

Mortgage rates saw little change last week amidst mixed economic news.

Treasury auctions held on Tuesday, Wednesday and Thursday saw weak demand; this could have been caused by the FOMC minutes that were released on Wednesday.

The minutes indicated that some FOMC members supported ending the current quantitative easing (QE) program within a few months.

The Fed is currently purchasing $85 billion monthly in bonds and Mortgage Backed Securities.

If the QE program is ended, demands for bonds and MBS will decline, which usually raises mortgage rates.

Employment Numbers Show Promise For Housing Market

Thursday's jobless claims offered some positive news for the Stillwater real estate market.

Jobless claims fell to 346,000, which is well below Wall Street's estimate of 365,000 jobless claims and the prior week's report of 385,000 jobless claims.

As more people find work, more families become able to buy homes.

Demand for homes will boost the housing market, which is already expanding in many areas.

While higher home prices are good for the economy, higher mortgage rates may be likely to follow.

This potentially presents a "double-edged sword" to home buyers with little financial flexibility.

Slower Retail Sales Largely Due To Autos

Retail Sales, which represent approximately 70 percent of the U.S. economy, moved from February's level of 1.1 percent to -0.4 percent in March.

Expectations were for 0.0 percent change.

The Retail Sales report exclusive of the volatile automotive sector was nearly identical except for the February's reading of 1.0 percent.

These reports suggest that while the economy is improving in some areas, it has a way to go before it has truly recovered.

What's Coming Up Next?

This week, investors will be paying attention to the Consumer Price Index (CPI) and the closely-related Core CPI, which is nearly identical except for its excludes the more volatile food and energy sectors.

These reports will be released on Tuesday for March, with little change expected for the CPI and no change expected for the Core CPI as compared to February.

The CPI is considered an important indicator of inflation.

Unexpected changes in inflationary growth can cause rapid and volatile responses in the financial markets.

Wednesday brings the Fed's Beige Book, which presents key economic data for each of the Fed's 12 regions.

Investors watch the Beige Book for signs of the Fed's position on economic policy during the upcoming FOMC meeting.

Jobless claims will be released Thursday with the expectation of 350,000 claims filed as compared to last week's 346,000 jobless claims.  

What's Ahead For Mortgage Rates This Week - April 8, 2013

Last week's economic news includes several factors that drove U.S. mortgage rates lower.

The Bank of Japan announced that it would increase its purchase of bonds by $1.4 trillion over the next two years. 

This news caused yields on Japanese bonds to fall, which made U.S. bonds more appealing to international investors, that in turn increased MBS prices and caused mortgage rates to fall.

Bumpy Employment Numbers Support Lower Interest Rates

Other significant economic news involves an unexpected drop in the number of new jobs created last month.

The Bureau of Labor Statistics (BLS) Nonfarm Payrolls Report issued Friday indicated that 88,000 jobs were added in March, which fell considerably short of the expected 190,000 jobs added as well as the 236,000 jobs added in February.

Average hourly earnings remained flat against February, which indicates another stall in U.S. economic growth. 

Expanding employment sectors for March included professional and business services and healthcare, while retail jobs decreased.

Jobless claims increased last week in concurrence with lower than expected jobs added for March.

New jobless claims came in at 385,000 and were higher than expectations of 345,000 new jobless claims and the prior week's jobless claims of 357,000.

The monthly unemployment rate fell from 7.7 percent to 7.6 percent, but this isn't encouraging news.

According to the BLS, the unemployment rate fell due to workers leaving the work force instead of workers finding jobs.

Next week, Treasury Auctions will be held Tuesday, Wednesday and Thursday.

On Wednesday, the Federal Reserve will release FOMC minutes.

Fed Continues Monthly Bond Purchases

Investors and analysts review the minutes for predicting future economic developments and also for gauging the Fed's sentiment about how or if changes should be made to the current quantitative easing program (QE).

The current QE program involves the Fed's monthly purchase of $85 billion in bonds and MBS is intended to keep long-term interest rates including mortgage rates low.

Retail Sales will be released Friday, and as indicated by falling job numbers in the retail sectors, analysts are expecting no growth for March in either report. 

Global news concerning North Korea and the European Union economic situation could also move U.S. markets up or down depending on the nature of the news.

While not encouraging in terms of an economic recovery, these events show that the recovery is proceeding with ups and downs; this doesn't provide investors a clear picture and may cause them to seek safe haven in bonds.

The good news for Stillwater homeowners is uncertainty and low expectations of the financial markets typically help keep mortgage rates lower.

What's Ahead For Mortgage Rates This Week: April 1st, 2013

European Market Jitters Continue To Affect The US Economy

Mortgage rates fell last week as investor concerns over the European economy grew.

Fears of growing differences between wealthier European nations and European nations needing economic aid brought higher bond prices and lower mortgage rates.

Positive news for Cyprus came when an agreement for an EU bailout was reached, but strict terms indicate that Germany and other nations are growing less enthusiastic about bailing out the banks of EU nations with shaky economies.

Meanwhile, the Italian government has not been able to agree on a coalition government, which reduces the chances for economic reform in the EU's third largest country.

European trade with the U.S. could fall as the result of the EU's ongoing economic challenges; this in turn would likely reduce U.S. inflation, which is good for lower mortgage rates.

Low inflation could also prolong the Fed's commitment to its quantitative easing program that is designed to keep long term interest rates, including mortgage rates, lower.

Last Week's Economic News Quiet, No Major Surprises

On Tuesday, New Home Sales for February were released, and came in short of investor expectations of 420,000 home sales on an annual basis.

February's figure came in at 411,000 new homes sold as compared to January's revised reading of 431,000 new homes sold.

Winter weather conditions are one reason for the decline in new home sales, which was the largest decline since February of 2011.

The National Association of REALTORS® released its Pending Home Sales Index for February on Wednesday; pending home sales reflected the results for New Home Sales with a reading of -0.4 percent as compared to expectations of a 2.0 percent reading.

January's reading for Pending Home Sales was also higher at 4.5 percent.

Home prices and mortgage rates move according to supply and demand; if demand for homes falls, home prices are likely to do likewise as are mortgage rates.

But as demand for homes increases and prices rise, mortgage rates typically rise as well. Would-be buyers who have been waiting for their best deal may want to get into the housing market now, as strong signs of economic improvement are in play, but home prices and mortgage rates haven't yet gone through the roof.

In other economic news, Thursday's Jobless Claims Report fell short of Wall Street projections and came in at 357,000 new jobless claims against expectations of 340,000 new jobless claims.

The previous week's jobless claims came in at 336,000 new jobless claims.

Analysts typically view a four-week rolling average of jobless claims as a more accurate indicator for the economy as jobless claims can vary widely week-to-week.

Consumer Sentiment for March was released Friday and came in at 78.6 and exceeded expectations of 72.5 for March.

The current reading also surpassed the prior reading of 71.8 percent. As consumers gain confidence in the economy, they are more likely to buy homes.

This week, the European Central Bank (ECB) meeting scheduled for Thursday and monthly Employment Data set for release Friday are among anticipated economic news events. 

What's Ahead For Mortgage Rates This Week - March 25th, 2013

Last week's economic news was dominated by events in Cyprus and the Federal Open Market Committee (FOMC) meeting on Wednesday.

Mortgage rates fell last Monday as investors became concerned over news that a Cyprus bank bailout was in the works.

Federal Reserve Holding Course With Mortgage Backed Security Purchases

The FOMC met on Wednesday and in a press release after the meeting, noted that no immediate changes to the present economic easing program would be made.

The Fed officers will continue to monitor the nation's economy, and are eventually expected to implement a gradual reduction of their monthly bond and mortgage backed security (MBS) purchases when the nation's economy has recovered sufficiently.

The Fed currently purchases $85 billion in bonds and MBS in an effort to keep long term interest rates low.

If the Fed should reduce its purchases, mortgage rates would be likely to rise. 

Investors viewed the Fed's announcement as positive news and bond prices fell, which caused mortgage rates to rise, but mortgage rates finished the week slightly lower than last week.

Continuing Economic Turmoil In Europe May Encourage Lower US Mortgage Rates

In global news, the European Union (EU) threatened to withdraw its promise of aid to Cyprus banks if they cannot raise funds required as a condition of the bailout.

A one-time tax on bank deposits was suggested, but ultimately rejected as Cypriots nixed the idea of taxing their savings, even on a one-time basis.

Cyprus banks provide a tax shelter for foreign citizens, and the banking system in Cyprus is disproportionately large compared to its size.

Failure of this banking system could create serious repercussions for global financial markets.

The EU has set today, March 25 as a deadline for Cyprus to find the funding required for the bailout to be given.

Investors could seek safe haven in bonds if the EU withdraws its offer of a bailout to Cyprus banks, which usually creates downward pressure on mortgage rates.

If the EU offers Cyprus banks a bailout, then investors may respond positively and buy more stocks which would likely cause mortgage rates to rise.

Upcoming Economic Reports Could Affect Mortgage Rates

Other economic news scheduled for next week includes Treasury Auctions on Tuesday, Wednesday and Thursday.

The Department of Commerce issues its monthly New Home Sales report on Tuesday.

This report measures sales of new privately owned single family homes, and indicates buyer interest in new homes and also future demand for goods and services used by homeowners.

 

What's Ahead For Mortgage Rates This Week - March 25th, 2013

Last week's economic news was dominated by events in Cyprus and the Federal Open Market Committee (FOMC) meeting on Wednesday.

Mortgage rates fell last Monday as investors became concerned over news that a Cyprus bank bailout was in the works.

Federal Reserve Holding Course With Mortgage Backed Security Purchases

The FOMC met on Wednesday and in a press release after the meeting, noted that no immediate changes to the present economic easing program would be made.

The Fed officers will continue to monitor the nation's economy, and are eventually expected to implement a gradual reduction of their monthly bond and mortgage backed security (MBS) purchases when the nation's economy has recovered sufficiently.

The Fed currently purchases $85 billion in bonds and MBS in an effort to keep long term interest rates low.

If the Fed should reduce its purchases, mortgage rates would be likely to rise. 

Investors viewed the Fed's announcement as positive news and bond prices fell, which caused mortgage rates to rise, but mortgage rates finished the week slightly lower than last week.

Continuing Economic Turmoil In Europe May Encourage Lower US Mortgage Rates

In global news, the European Union (EU) threatened to withdraw its promise of aid to Cyprus banks if they cannot raise funds required as a condition of the bailout.

A one-time tax on bank deposits was suggested, but ultimately rejected as Cypriots nixed the idea of taxing their savings, even on a one-time basis.

Cyprus banks provide a tax shelter for foreign citizens, and the banking system in Cyprus is disproportionately large compared to its size.

Failure of this banking system could create serious repercussions for global financial markets.

The EU has set today, March 25 as a deadline for Cyprus to find the funding required for the bailout to be given.

Investors could seek safe haven in bonds if the EU withdraws its offer of a bailout to Cyprus banks, which usually creates downward pressure on mortgage rates.

If the EU offers Cyprus banks a bailout, then investors may respond positively and buy more stocks which would likely cause mortgage rates to rise.

Upcoming Economic Reports Could Affect Mortgage Rates

Other economic news scheduled for next week includes Treasury Auctions on Tuesday, Wednesday and Thursday.

The Department of Commerce issues its monthly New Home Sales report on Tuesday.

This report measures sales of new privately owned single family homes, and indicates buyer interest in new homes and also future demand for goods and services used by homeowners.

 

What's Ahead For Mortgage Rates This Week: March 18th, 2013

Last week's positive employment reports were good news for the economy, which typically causes mortgage rates to rise, but mortgage rates ended the week lower.

As of Thursday, Freddie Mac reports that the average mortgage rate for a 30-year fixed rate mortgage was 3.63 percent with borrowers paying their closing costs and 0.8 percent in discount points.

The average mortgage rate for a 15 year loan was 2.79 percent with borrowers paying their own closing costs and 0.8 percent in discount points.

Strong Retail Sales Show Consumer Confidence Improving

In other economic news, retail sales for February surpassed Wall Street expectations and grew by 1.1 percent against predictions of 0.5 percent and January's reading of 0.1 percent.

Retail sales account for 70 percent of the U.S. economy and growing retail sales are a strong indicator of economic recovery, which generally causes mortgage rates to rise as bond prices including Mortgage Backed Securities fall.

With this strength in the retail sector, it may be a good time to consider locking interest rates for purchase and refinance transactions.

Results of Treasury auctions held Tuesday, Wednesday and Thursday were mixed.

Tuesday's auction of 3-year notes saw average demand, Wednesday's auction of 10-year notes was strong, and Thursday's auction of 30-year bonds drew a weak response.

Financial Reporting Strong Across Multiple Indices

The Producer's Price Index (PPI) for February met expectations at 0.7 percent and exceeded January's level of 0.2 percent.

The Consumer Price Index (CPI) for February came in at 0.7 percent and exceeded expectations of 0.5 percent and January's reading of 0.0 percent.

The Core CPI, which excludes food and energy sectors, demonstrates the impact of high fuel prices on the CPI with its lower numbers.

The Core CPI for February is 2.0 percent higher than for February 2012.

Upcoming Federal Reserve Meeting May Bring Interest Rate Changes

The Federal Reserve is not likely to modify its bond purchase program until the inflation rate reaches 2.5 percent.

Next week, the Federal Reserve will meet on Wednesday; investors will be waiting to see how the Fed responds to recent positive economic news in terms of potential changes to its bond purchase program, which is helping to keep mortgage rates lower.

As the deadline of March 27 for funding the Federal government approaches, investors will be following legislative talks to see how or if funding will be approved by the deadline.

What’s Ahead For Mortgage Rates This Week: March 11th, 2013

Mortgage rates and the major stock market indices rose last week in response to a strong jobs report and lower national unemployment rate.

The Department of Labor's Non-farm Payrolls report for February surpassed expectations with 236,000 new jobs reported against expectations of 170,000 new jobs expected by Wall Street.

This stronger than expected showing in jobs numbers points to a stronger economy and may lead to less pressure to hold mortgage interest rates lower.

The Dow Jones Index also reached record levels last week. This strong stock market performance is to be expected with better than expected employment reports.

February's numbers also exceeded January's reading of 157,000 new jobs added to the economy.

Lower Unemployment Rates Help Economy, May Push Interest Rates Higher

The Unemployment Report for February also provided good news as February's reading dropped to 7.7 percent from January's unemployment rate of 7.9 percent.

While good news, it's important to bear in mind that the Fed has established and unemployment rate of 6.5 percent as a benchmark for ceasing its monetary stimulus program.

The Federal Reserve released its Beige Book Report for March on Wednesday, and summarized reports from its 12 districts by noting modest to moderate economic improvement in 10 districts and slower economic growth in 2 districts.

Residential real estate markets are improving in most districts with home prices rising and inventories of available homes shrinking.

This news, coupled with last week's rising mortgage rates is further emphasizes the upward trend in home prices in many areas and the rising cost of financing or refinancing a home.

While rising home prices are good for the economy, they impact affordability of homes, particularly for first-time home buyers.

Busy Upcoming Week In Financial News

Next week has a busy calendar of scheduled economic news; here are a few highlights:

• Tuesday, Wednesday and Thursday: Treasury Auctions
• Wednesday: Retail Sales, and Retail Sales without Auto Sales
• Thursday: Producers Price Index (PPI) and Core PPI (PPI without volatile food and energy sectors)
• Thursday: Weekly Jobless Claims, Consumer Price Index (CPI) and Core CPI (without food and energy sectors)
• Friday: Consumer Sentiment

It will be interesting to see how or if Consumer Sentiment reacts to recent signs supporting progress toward economic recovery.

If you've been watching interest rates to see when the best time is to lock in, this may be a good opportunity.  

As the economy continues to improve, mortgage interest rates will continue an upward climb.

What's Ahead For Mortgage Rates This Week: March 4th, 2013

U.S. Budget Stalemate, Italian Elections Stir Concerns

Mortgage rates were lower last week as investors sought safety in bonds in the wake of US legislators' failure to agree on budget cutbacks, and after Italy’s elections failed to reveal a leader committed to continuing economic reform.

When bond prices including Mortgage Backed Securities rise, mortgage rates typically fall.

While the March 1st deadline for passing budget cutbacks for the U.S. government passed without a resolution, emergency legislation passed last year will keep the government running until March 27.

If a budget is not passed by then, the federal government could face shutdown.

As it stands, $85 billion in cuts are scheduled over the next seven months, but this represents only about 2 percent of the federal budget.

Investor concerns are likely to rise if the March 27 deadline approaches without a resolution.

Italian Elections Influence Investor Sentiment

On Monday, Italian elections were held, but the results did not reveal a leader dedicated to continuing economic reforms necessary for stabilizing Italy's economy.

Another round of elections may be required to determine Italy's new leader.

There is deep conflict in Italy as citizens do not agree with the need for economic austerity measures.

As the Eurozone's third largest economy, Italy's division on future economic reforms raises two concerns for investors.

First, without a clear reform leader established in last week’s elections, Investors fear that austerity measures may be relaxed and increase Italy’s debt risk.

A less likely risk is that Italy may leave the EU if it cannot resolve its need for economic reforms with its citizens' wishes.

Upcoming Economic Releases

The coming week's scheduled economic releases include:

• Ongoing developments regarding the U.S. budget and aftermath of the Italian elections are expected to continue influencing U.S. financial markets.

• On Tuesday ISM Services Index for February will be released. Wednesday's news includes the Fed's Beige Book Report for March and Factory Orders for January.

• Thursday's scheduled economic news releases include Productivity and Trade Balance reports. Friday finishes the week's economic news with the Employment report, which includes job and unemployment data for February.

As spring approaches, demand for homes typically increases, which in turn may drive up home prices and mortgage rates.

Consider getting pre-approved for a mortgage and looking for your new home sooner than later.

Improving Market Index : Up To 201 Cities For December 2012

Last week's National Association of Home Builders/First American Improving Markets Index (IMI) brought positive news about U.S. housing markets and the broader U.S. economy, in general.

According to the IMI, there are now 201 U.S. markets which can be considered "improving".

To meet this standard, a local area economy must exhibit at least six consecutive months of improvement in terms of local employment, single-family housing permits and area home prices; and, at least six months must have passed since each of these readings were at their respective low points, called troughs.

The Improving Market Index added 76 metropolitan areas in December as compared to the month prior. 45 states are now represented on the list, in addition to the District of Columbia.

The cities deemed "improving" aren't limited to recent, high-profile hot spots such as Detroit, Michigan; and Phoenix, Arizona, either. Several of the newly-included areas for December were :

• Atlanta, Georgia
• Bloomfield, Illinois
• Ithaca, New York
• Riverside, California
• Seattle, Washington

The geographic diversity of this month's Improving Market Index suggests a nationwide economic recovery in progress. More jobs, a steady supply of available homes, plus rising home prices helps communities thrive.

Unfortunately, it may also mean less opportunity to buy homes as rock-bottom prices.

As sellers and home builders gain confidence in the economy, it may be more challenging for today's Stillwater buyers to get a "great deal".  In addition, an improving, post-recession economy will likely lead mortgage rates higher, robbing home buyers of their purchasing power.

Freddie Mac says that the average 30-year fixed rate mortgage rate is 3.32% nationwide. In a fully-recovered economy, that rate could be 5 percent or higher. The impact on monthly housing payments would be palpable.

The National Association of Homebuilders expects more markets to join the Improving Market Index list through 2013. Today's home buyers may want to lock in today's low rates before economic improvement leads mortgage rates higher.

The Federal Reserve Begins A 2-Day Meeting Today

The Federal Open Market Committee (FOMC) begins a 2-day meeting today, its last of 8 scheduled meetings this year.

The Federal Open Market Committee is a 12-person subcommittee within the Federal Reserve. It's the group which votes upon U.S. monetary policy. 

The monetary policy action for which the FOMC is most well-known is its setting of the Fed Funds Funds. The Fed Funds Rate is the interest rate at which banks borrow money from each other overnight.

Since late-2008, the Fed Funds Rate has been near zero percent.

Prime Rate, a business and consumer interest rate used in lines of credit and credit card rates, is based on the Fed Funds Rate. Prime Rate has been similarly unchanged since 2008.

One rate which the Federal Reserve does not set is the 30-year fixed rate mortgage (FRM) rate.

Like all other mortgage rates, the 30-year FRM is based on the market value of mortgage-backed bonds; securities bought and sold by investors.

There is no correlation between the Federal Reserve's Fed Funds Rate and the everyday homeowner's 30-year fixed rate mortgage rate. Some months, the two rates converge. Other months, they diverge. Since 2000, they've been separated by as many as 5.29 percentage points.

They've been as close as 0.52 percentage points.

However, although the Federal Reserve does not set U.S. mortgage rates, that doesn't mean that it can't influence them. The Fed's post-meeting press release has been known to make mortgage rates get volatile.

If, in its post-meeting press release, the Fed notes that the U.S. economy is slowing and that new economic stimulus is warranted, mortgage rates will likely fall throughout Minnesota. This is because additional Fed stimulus would likely lend support to U.S. mortgage markets which would, in turn, boost demand for mortgage-backed bonds.

Conversely, if the Fed acknowledges stronger-than-expected growth in the U.S. economy and no need for new stimulus, mortgage rates are expected to rise.

Either way, mortgage rates will change Wednesday upon the FOMC's adjournment -- we just don't know in which direction. Rate shoppers may see fluctuations of as much as 0.250 percent.

The FOMC adjourns at 12:30 PM ET.

October Jobs Report Blows Away Estimates; Mortgage Rates Falling

Another month, another good showing for the U.S. economy.

Mortgage rates are performing surprisingly well after Friday's release of the October 2012 Non-Farm Payrolls report. The Bureau of Labor Statistics' monthly report beat Wall Street expectations, while also showing a giant revision to the previously-released job tallies of August and September.

171,000 net new jobs were created last month against calls for 125,000 and revisions for the two months prior totalled 84,000.

October also marked the 25th consecutive month of U.S. job growth -- a period during which 3.8 million jobs have been reclaimed. This sum represents more than half of the 7.3 million jobs lost between 2008-2009.

Nationally, the Unemployment Rate rose by one-tenth of one percent last month to 7.9%. It may seem counter-intuitive to see unemployment rates rise even as job growth soars. However, it's a sign of economic strength.

October's rising Unemployment Rate is the result of more workers entering the U.S. workforce and actively looking for jobs, a manifestation of rising consumer confidence levels and optimism for the future.

Typically, mortgage rates in Minnesota would worsen on a strong jobs report like this. This month, however, rates are improving. This is mostly the result of Hurricane Sandy, which is expected to create a drag on the U.S. economy with its $50 billion damage tag.

The storm has Wall Street looking past the strong jobs report, positioning itself for the next few months. Investors are moving into less risky assets until the uncertainty surrounding the storm's effects subside. Mortgage-backed bonds are considered "safe" and are benefiting from this safe haven buying pattern.

For home owners and buyers in Stillwater and nationwide, the shift is yielding an opportunity to lock mortgage rates at artifically-low levels. 30-year fixed rate mortgages remain well below 3.50% for borrowers willing to pay discount points, and home affordability is approaching an all-time high.

Home values are expected to rise through 2013 so consider this week's low rates a gift. If you're in a position to go to contract and/or lock a mortgage rate, you may want to take that step today.