Current Interest Rates – Week of 6/25/12
Home loan interest rates, home affordability, and low inventory set the stage for homeowners and home buyers to save thousands. Whether refinancing, moving up, or financing your first home, now is the time to create your real estate strategy and put a plan in place.
What happened with interest rates last week?
The Fed held their quarterly meeting last Tuesday and Wednesday, with stimulus and the possibility of QE3 being announced. The result, extend the current stimulus program “Operation Twist”, allowing the possibility of QE3 in the future. Interest rates took cues from stocks as investors used the announcement as an opportunity to make a quick buck in stocks, causing a brief sell-off in mortgage backed securities, causing home loan rates to increase. Fortunately for interest rates, the stock rally was brief and home loan rates found their way back to levels where they opened the week, poised to make a run at setting/meeting historic lows.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
Following a week full of anticipated announcements from the Fed, the only scheduled economic reports due this week will be on Friday 6/29 with the release of Core PCE, a popular measure of inflation that excludes food and energy costs. The previous release was at 1.9%, within the Fed’s target range of 1.7-2.0%. While not expected, a release above the target range could cause interest rates to go up. The Chicago PMI, aka “Business Barometer” is also due for release on Friday. Signs of business growth would be good for stocks and bad for rates. Signs of slowing/stagnant business growth would be bad for stocks and good for the safe haven of bonds/interest rates.
The elephant in the room would be the pending release of the Supreme Court’s ruling on the the Affordable Health Care Act. While seemingly unrelated to interest rates or home purchase financing, the ruling will have a great impact on corporations down to small businesses as their plans for growth may be dependent on their required health care plans and/or contributions. With no set date/time for the release of the ruling, it is expected at the end of the week and could be a big factor in market movement once the news hits the wire.
Here’s our strategy for the days and weeks ahead…
Interest rates are trading in a tight range attempting to break out to test the historic lows reached on June 1st. Since mortgage backed securities have never closed above this level, it now acts as a ceiling of resistance that will likely take some sort of catalyst in the market to break through. The good news is, the catalyst could come from any of the following likely sources: further Euro meltdown, Supreme Court ruling on Affordable Healthcare Act, poor economic releases…
The key is to know where you stand with your current home financing in relation to what’s available in today’s low interest rate environment. While rates are likely to remain low, waiting a year to refinance at the same rate available today, would end up costing you thousands of dollars. On a similar note, if you’re buying a home in Dallas, the prices are likely to be higher next year, causing less affordability and the potential of a higher monthly payment than you would have today.
The bottom line is know where you stand in relation to where you would like to be, whether that’s in the same home with a lower payment or in the new home of your dreams. The opportunities available to homeowners are amazing.
We maintain an ongoing dialogue with our clients about the market and interest rates throughout their financing experience so we can take advantage of the lowest rates when they present themselves. We all want the lowest rate, and the best way to ensure that you get the lowest rate, is to build a relationship with your mortgage planner, so they can best advise you on when to lock in your rate. Call us today for a complimentary mortgage review or Apply Online.
Current Interest Rates – Week of 6/18/12
Interest rates could go up at a dramatic rate on Wed. 6/20. Know the factors that influence rates this week before they go up.
What happened with interest rates last week?
Home loan interest rates and mortgage backed securities traded in a relatively tight range last week following the announcement of a $125 billion bailout of the Spanish banking system. Since the announcement, investors and bond holders in Spain and Europe have fled their bond markets and found safe haven in other long term securities…Advantage U.S. home loan interest rates. As the Spanish bonds have sold, the yield has climbed over 7% for the first time since Spain joined the EU. Why? The Spanish bond is now dependent on the $125 billion bailout actually working and being paid back. Since the market isn’t convinced it will work, they are having to offer a higher rate of return /yield to be able to attract further investment.
On the home front, Core inflation was released last week showing no signs of immediate inflation risk, which is more good news for bonds and interest rates.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
There are no bond auctions scheduled this week and the only highlight on the economic calendar is the FOMC meeting on Tuesday 6/19 and Wednesday 6/20. The minutes will be released on Wednesday at 11:30 CT. Going into the meeting the Fed will be reviewing the economic indicators in our U.S. markets but the global markets will also weigh heavily. Based on our stagnant growth and the economic uncertainty in Europe. There is a strong likelihood that the Fed decide a third round of Quantitative Easing (QE3) be announced.
While the Fed deciding they’re going to pump billions of dollars into the bond markets may seem like a good thing for interest rates, history as shown us that the immediate impact has been for interest rates to go up at a rapid rate. This happens for two reason, 1) the stock markets see this as an opportunity to make some short term gains, let’s sell our low yielding bonds and make some money in stocks until the euphoria wears off, and 2) Inflation-The measure of purchasing power of goods/services. If the Fed turns on the printing presses once again to come up with the billions needed for the “stimulus” or “easing”, what does that do to the dollars that are already out there? They become less valuable. More supply/printing –> lower value of the dollars that are out there.
Here’s a chart showing mortgage backed securities after the last two announcements of easing/stimulus. The MBS were sold off, causing the yield/interest rates to go up. After QE2, rates went up by 1% or more in less than 45 days. “Operation Twist” gets announced, rates go up by .5% in less than a month.
Here’s our strategy for the days and weeks ahead…
If you have a home under contract or will be refinancing in the next 30 days, now is the time to create a strategy for your interest rate. Between now and Wednesday afternoon, there is a small window of opportunity to lock in your home loan interest rate before the Fed’s decision/commentary has a chance to weigh on the markets and cause interest rates to go up.
While it is possible that interest rates continue to drift lower, but we have absolutely zero data to show that interest rates would improve by .25% or more from current levels as they already sit at/near all-time historic low home loan rates. The data and information that we do have on hand shows how volatile the market can be after these Fed announcements and the risk of rates going higher seems MUCH greater than rates going lower.
We maintain an ongoing dialogue with our clients about the market and interest rates throughout their financing experience so we can take advantage of the lowest rates when they present themselves. We all want the lowest rate, and the best way to ensure that you get the lowest rate, is to build a relationship with your mortgage planner, so they can best advise you on when to lock in your rate. Call us today for a complimentary mortgage review or Apply Online.
Current Interest Rates – Week of 6/11/12
What happened with interest rates last week?
Opportunities come and go, particularly when it comes to interest rates. Over the last week, we saw interest rates trend slightly higher from their historic lows as stocks gained some momentum and glimmers of sunshine and rainbows started to come out of the European crisis. On the home front, the Fed members continue to straddle the fence when deciding whether further “easing” is needed to boost the economy.
In other market news, the European Central Bank decided not to cut rates, surprising the markets and helping stocks to break out of their slump with the S&P 500 bouncing above it’s 200 day moving average. While the stock rally likely won’t last long, keep in mind that any good news for stocks will typically come at the expense of mortgage backed securities/interest rates. Interested in learning more, check out What impacts interest rates?
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
Over the weekend, Spain announced a $125 billion bailout of its banking system. The bailout is intended to recapitalize the Spanish banks and keep the European Union from continuing a further downward spiral, but the euphoria surrounding the announcement has been short lived. Investors are fleeing from Spanish government bonds causing their yields to spike higher. Our U.S. bonds have received some boost, but will be following cues from the global markets as the week continues.
The economic reports due this week will deliver measures of inflation in our Core CPI and Core PPI. These inflation numbers indicate the rise in the cost of goods/services after excluding food and energy costs. While the Fed has yet to voice their concerns over inflation, it’s inevitable. We will be watching these reports closely as any talk/hints of a rise in inflation will immediately trigger a rise in interest rates.
Here’s our strategy for the days and weeks ahead…
With interest rates still near historic lows, we continue to advise our clients to lock in their interest rates when the opportunity presents itself, particularly if the transaction is closing in the next 30 days. Home purchase activity and low refinance rates have led to a large increase in loan volume across the nation. These new mortgage loans add to the supply of mortgage backed securities causing their price to drop and our interest rates to go up.
Next Wed. 6/20, the Fed will hold a meeting to discuss, among other things, whether or not there is need for further quantitative easing. The last few announcements of “easing” caused interest rates to go up at a rapid rate. It will be very important to have a strategy to lock in your interest rate leading up to this event.
We maintain an ongoing dialogue with our clients about the market and interest rates throughout their financing experience so we can take advantage of the lowest rates when they present themselves. We all want the lowest rate, and the best way to ensure that you get the lowest rate, is to build a relationship with your mortgage planner, so they can best advise you on when to lock in your rate. Call us today for a complimentary mortgage review or Apply Online.
Current Interest Rates – Week of 6/4/12
Opportunity is defined as a favorable juncture of circumstances. That is exactly what we see today in the current interest rate environment, an opportunity to seize the lowest interest rate in history, but these circumstances could change quickly.
What happened with interest rates last week?
The markets were flooded with more bad news out of Europe causing interest rates to break through all time lows, setting the stage for another run towards the history books. Throw in a bad Chicago PMI report, fewer added jobs and the employment rate ticking up to 8.2%, – that’s a recipe for a stock sell-off with investors moving their money into safer mortgage backed securities. As we pointed out in our last mid-week market update, this opportunity could be short lived.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
After last weeks turbulent ride of the Euro Zone waves, the stock markets hope to rebound on this slow economic news week. The S&P 500 closed beneath it’s 200 day moving average showing some bad signs, should stocks fall convincingly below this level (1,284). We’ll be watching this closely since a rally from stocks above this 200 dma would signal a potential rally in stocks, causing our interest rates to suffer.
Economic reports due this week will start with the ISM Services Index on Tuesday morning and will wrap up with Initial Jobless Claims on Thursday. The Jobless Claims only reports new applications of unemployment and only people who register their unemployment with the State, so there is little weight given to the data. Neither report should have much impact on the market.
Here’s our strategy for the days and weeks ahead…
Once again, we go into the week with historically low interest rates, interest rates that are trying to break through to lower levels on any given day. The slow news week will put interest rates at the mercy of news coming out of Europe and our local markets. The next big potential catalyst on the calendar is the FOMC meeting on June 20th, more specifically how QE3 (quantitative easing part III) is referenced. No, we’re not talking about a new IMAX-3d movie, but the “stimulus” or “infusion” by the government and Fed to further stimulate the growth of our economy. A failure to show further signs of recovery in our local and global markets, may trigger the Fed to implement QE3. This may seem like good news for interest rates, the government ponying up somewhere around half a trillion dollars to buy mortgage backed securities, but as we look back at further stimulus and easing announcements, interest rates have sold off at a rapid rate (see fig. 1). This may seem counter-intuitive, but more printing of money and pushing it into the economy, only increases the long term risk of inflation – as inflation goes up, so do interest rates.
All this to say, there is an opportunity that has presented itself leading up to the FOMC meeting on June 20th. We don’t know if QE3 will be released or how the markets react, but we do know how the markets have responded in the past. If you have a need for financing in the next 30 days, it may be worth locking while rates sit at historic lows. If you’re financing is further out, it’s time to put a strategy in place so that you can take advantage of the market before it gets away. When the market decides to move in a given direction, we don’t always have days or weeks to decide. The “best rates” are only available to those that can lock at the right time.
We maintain an ongoing dialogue with our clients about the market and interest rates throughout their financing experience so we can take advantage of the lowest rates when they present themselves. We all want the lowest rate, and the best way to ensure that you get the lowest rate, is to build a relationship with your mortgage planner, so they can best advise you on when to lock in your rate. Call us today for a complimentary mortgage review or Apply Online.
Mid Week Update – Interest Rates Hit All Time Lows
The news out of Europe has continued to fan the flames of mortgage backed securities and other US treasuries. The Chicago PMI was released today with worse than expected results, creating yet another catalyst that could push rates lower.
The Jobs Report is still to come on Friday and could help interest rates make a push even lower. Couple that with any more bad news out of Europe and we could see a 30 yr. fixed rate close to 3.5%.
The next Fed meeting is on June 20th. The hot topic will be whether or not there should be further Quantitative Easing. In the past, the bond markets have not responded well to past QE announcements, so there is a short window of opportunity leading up to the Fed meeting to lock in your rate at historic lows.
The chart below shows the “Rising Wedge” that has been created in mortgage backed securities. A break out above the wedge would continue to paint the record books with historically low interest rates. But we caution, a break below this wedge could come at an alarming rate causing rates to spike up without a moments notice. Call us today to schedule a new home buyer consultation or click here to start your mortgage review!
Current Interest Rates – Week of 5/29/12
Food for thought…Interest rates were a staggering 1% higher at this time last year. Sure, sounds like a big swing, but what does this mean to someone in the market for a home loan? The current low interest rates allow someone looking in the $225k price range to afford an extra $25,000 in loan amount compared to a year ago. The same loan amount with a point higher rate would be over $133 more per month. While interest rates may not go up immediately, the chart below illustrates how quickly interest rates can move.
What happened with interest rates last week?
After reaching all time lows with interest rates on multiple occasions in weeks prior, interest rates were not able to push lower. Instead, we saw mortgage backed securities sell off and have started to make a pretty good case that rates are about as good as they’re going to get for the near term.
The eco-drama continues over in Europe with Spain trying to get a grip on their financials. It’s your choice on who to thank, but Spain, Greece and the rest of the European Union have, without question, helped move our interest rates to where they are and have kept them from going higher. Fear based selling drives money into longer term bonds, helping interest rates.
Markets closed early last Friday and were closed no Monday in observance of Memorial Day.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
Coming up during this holiday shortened week is the ADP Employment Report on Thursday 5/31 at 7:15 CT and Chicago PMI at 8:45 CT, both of which could cause interest rates to move.
Rounding out the week is one of the more action/news filled days we typically see on the calendar. This will be kicked off on Friday morning, starting at 7:30 CT prior to the market open. The first item worth highlighting is the release of Core PCE, a popular measure of inflation. The Fed likes to see this number within a target range of 2%. Should this figure come in higher than expected, interest rates could suffer due to fear of inflation, the arch nemesis of bonds/rates.
Perhaps the largest report of all is the Jobs Report, estimating non-farm payrolls to be at 155,000. A number reported higher than expected means a potential for rates to suffer as the warm and fuzzies of a growing economy fill the air and investors move their money out of bonds and into stocks.
Here’s our strategy for the days and weeks ahead…
Home mortgage interest rates have gone up over the last few weeks since reaching all time lows. Will interest rates get that low again? It wouldn’t be a surprise if they did, but based on the data and tools that we have on hand, interest rates are more likely to go up over the next year than they are to go lower. Take a look at the chart above and imagine the market moving the other direction, causing rates to increase over 1%. It’s not a matter of if they’ll go up, but when, so talk with your mortgage planner to put a plan in place to take advantage of these rates while they’re still around.
Current Interest Rates – Week of 5/21/12
What happened with interest rates last week?
Interest rates and mortgage backed securities met all time lows last week on 3 separate occasions. These historic levels have only been reached one other time, back on February 2, 2012, and have been fueled by the fears of a Greek euro exit, deteriorating health of the Spanish banking system, and the stock market’s steep sell-off. As the lows were reached with interest rates, the markets seem to have once again found this as a ceiling of resistance, meaning some sort of catalyst will likely be needed to break through the ceiling and avoid getting pushed back lower.
In the FOMC minutes released last week, several members noted “that additional monetary policy accommodation could be necessary if the economic recovery lost momentum”, however, “one participant noted the potential risks and costs associated with additional balance sheet actions.” The markets will be on standby to see how this unfolds in coming meetings.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
There is little news slated to come out this week that would have a major impact on rates. Investors will be taking cues from the headlines out of Europe and results from Treasury auctions. Facebook will act as a barometer for the other social media stocks as the Dow, Nasdaq and S&P look to rebound.
New homes sales figures are due on Wednesday at 9 am CT. Initial jobless claims and durable goods will be released on Thursday at 7:30 am. The week will close with Consumer sentiment at 8:55 am on Friday going into the holiday weekend.
Here’s our strategy for the days and weeks ahead…
It’s a great time to be buying or refinancing with interest rates at historic lows. Looking back at our previous attempt to break through these levels, we saw rates climb one half percent in 45 days, with some stretches moving .25% over a one or two day span. While we don’t see the catalyst for this to happen on the calendar, any positive news coming out of Europe or our equity markets will give investors a reason to make a quick buck by selling their bonds and buying stocks, causing interest rates to suffer. If you’re in a short time frame (less than 30 days), be ready to lock at a moment’s notice and make sure that your loan officer or mortgage planner has a strategy in place to lock in your rate as news unfolds.
The stock and bond markets will be closed on Monday for Memorial day. Next week’s market update will be released on Tuesday, May 29th.
Current Interest Rates – Week of 5/14/12
What happened with interest rates last week?
There wasn’t a whole lot of movement with interest rates last week as mortgage backed securities continue to trade at all time highs, yielding some of the lowest interest rates ever. Political tensions in Europe continue to raise questions of stability in global markets, causing investors to seek the safe haven of US government securities and Mortgage Bonds and drive our yield (rates) lower. Investors are taking profits anywhere/anytime they can get them, following cues from global and economic reports. Aside from the continued European woes, JP Morgan reported a $2 billion loss that is weighing on stocks and brings on more fear-based bond buying, for now.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
This week’s economic news kicks off with the release of the Consumer Price Index (CPI) on Tue. May 15th at 7:30 CT. CPI is a measure of inflation based on a fixed basket of goods. In other words, what’s the “bang for your buck”. If this comes in higher than the expected (.2%), look for interest rates to suffer.
Next on the schedule is release of the FOMC minutes on Wed. at 1pm CT. The key points that investors will be looking for are the verbiage surrounding “inflation” and whether there is a likelihood for further “help” to the markets through Quantitative Easing 3 (QE3). The last FOMC commentary indicated that there would not be a QE3 anytime soon, but will be watching closely for changes in this policy. While further easing may not be the ultimate long term solution, it would cause interest rates to push closer towards a 30 yr. fixed at somewhere around 3.5%.
What’s the Fed have to say about inflation? Probably not much, but the markets will be listening for any clues that inflation is on the rise. The Fed has already pledged to keep interest rates at low levels through mid-2013 but their way of doing that is printing money to buy more bonds (like QE1, QE2, and Operation Twist). More money gets printed and into the economy, the more risk you have for inflation. The higher inflation, the higher that interest rates will be. See where we’re headed here?
Here’s our strategy for the days and weeks ahead…
Interest rates are at historic lows giving homeowners and home buyers an opportunity to afford more home than they ever could in the past. While rates could continue to get lower and set new historic lows, markets can move extremely fast in this volatile world economy. Our team will be monitoring the mortgage backed securities closely as the economic news unfolds so that we can advise clients and referral partners on their best opportunity to lock in the lowest rate. If you’re on the fence, kindly start working your way down. Rates can not hold at these levels for a long period of time.