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.