Current Interest Rates – Week of 8/6/12
In another volatile week, interest rates see highs and lows based on a mixed bag of economic reports and commentary. After breaking through key support levels and rates still near historic lows, we urge potential prospects and clients to start creating a strategy to take advantage of the big swings in their potential interest rate for their home loan.
What happened with interest rates last week?
After seeing one of the worst trading days in months on Friday 7/27, mortgage backed securities and interest rates made up most of their ground by the time the market closed on Monday 7/30. Showing a clear example of how volatile interest rates can be. The choppy trading continued throughout the week.
The major catalysts leading to these swings came from commentary out of last week’s Federal Reserve monetary policy statement. While the Fed said that the economic activity had slowed over the first half of 2012, there were not yet any announcements of further stimulus or QE3.
On Friday, the market opened with an expected 100,000 new jobs created by employers in July. The actual figure came in far better than expected at 163,000, while the Unemployment rate for people still filing/receiving unemployment assistance increased to 8.3%. Investors saw this as a ray of hope and helped push stocks higher while our mortgage backed securities and interest rates suffered, falling below a key level of support for the first time since March. Another reminder to be proactive with your home financing, whether purchasing or refinancing.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
After the rough trading day on Friday, mortgage bonds are trying to shake off some of the losses and stage a rally to open the trading week. After falling below the key support at the 25 day moving average, we will be watching to see if mortgage backed securities can close above the resistance level and start to establish a new trend towards historic lows.
There is not much economic data scheduled for release this week but investors will be watching to see how the Bond market handles an auction of $72 billion in auctions. This is where the market gets tested. Are our bonds still the safest haven for global investors looking to minimize risk? We’ll know by the end of the week.
Here’s our strategy for the days and weeks ahead…
Mortgage backed securities and interest rates have been extremely volatile over the last few weeks, showing glimpses of market uncertainty that we’ve faced throughout this financial crisis. With so many outside influences affecting the direction of interest rates, it is important to identify a trading range so we can have a better opportunity to secure the lowest interest rates when the opportunity arises.
Mortgage backed securities closing below the 25 day moving average for the first time since March could change the market sentiment and lead interest rates higher. Until bonds stabilize above this level, we will be recommending that our clients lock in their interest rates in the near and short term to take advantage of near historic lows. Should the market move to new historic lows after a rate lock, our team has the ability to renegotiate your interest rate with our lenders, providing a win win situation in this volatile and uncertain market.
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.