Current Interest Rates – Week of 8/13/12

Home loan and mortgage interest rates creep higher as stocks rally for a fifth straight week.  Timing is everything whether buying a new home or refinancing.  As the pendulum swings, make sure you stay informed to better your chances of securing the lowest possible interest rate.

What happened with interest rates last week?

Interest rates continued their upward trend this past week on mediocre results of the $72 billion in Bond auctions and a convincing drop in Initial Jobless Claims.  Both factors helped the stock markets rally for a fifth straight week and pushed mortgage backed securities (MBS) below key resistance at the 25 and 50 day moving average.  While the MBS have managed to climb back above the 50 day moving average, any further sell-off could continue to push rates higher.

Taking a more broad look at the market and Global economy, it’s hard to see any light at the end of the tunnel.  The Euro-drama continues to make investors weary of foreign trades and is now compounded with China reporting very weak export numbers, a sign of further slowing in global imports.  Uncertainty breeds fear, fear brings on the Bond buying, but now we’re back to this timing the market thing.

What’s coming up this week on the economic calendar and what’s the impact on interest rates?

The economic calendar is full this week with some important releases to keep an eye on.  Retail Sales will start the releases on 8/14 before the market opens, showing a glimpse of consumer spending patterns.  The expectations are for an increase of .2%, but a report coming in better than expected could spell t-r-o-u-b-l-e for Bonds and interest rates.  Investors would start drinking the kool-aid again and ride the temporary euphoria by selling bonds and buying stocks.  Same goes for the Consumer Price Index (CPI), to be released on Wed. 8/15.  The estimated inflation measure could trigger further Bond sell-off and an increase in rates if the CPI comes in better than expected.  Remember, inflation has a direct impact on interest rates:  inflation goes up, interest rates go up.

The last major report for the week will be the Philly Fed Index on Thursday 8/16 at 9 am CT.  The Philly Fed Index gives a report of our manufacturing production and can foreshadow what’s to come in the ISM Index (a national manufacturing index based on surveys from industrial companies).  The report can have a major impact on interest rates.  More than anything, the week of economic news will give the Federal Reserve an idea of where our economy is headed and what policy actions may need to be taken.

Here’s our strategy for the days and weeks ahead…

With mortgage backed securities breaking through two key resistance levels at the 25 and 50 day moving averages, we are continuing to advise our clients closing in the coming days or weeks to lock in their interest rate.  The MBS and interest rates have managed to stabilize above the 50 day moving average, but the reality of rising interest rates has started to set in.

Our clients closing in the coming weeks-months are being advised to cautiously float their interest rate with the hope that our support levels can hold with a slowing global economy.  The Euro crisis is far from over and will help keep our rates low, but timing is everything.  We will be watching the market closely to get out ahead of any market movements and make sure we can advise our clients to get the best possible financing and lowest interest rate.

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.

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+Patrick Glaros empowers people to find their best home loan option. Through planning and education, and a goal-oriented approach, Patrick and the team at Dallas Mortgage Planners have one common goal: Help clients make an informed decision to choose the best home loan for their unique situation. Find other articles written by Patrick.

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