Mortgage Rate and Real Estate Update – Week of 12/03/12
No deal yet on the Fiscal Cliff and we know you’re getting tired of hearing about it. However, home ownership is a big part of the plan. Find out if home mortgage deductions are going away and how other news from the Fiscal Cliff talks will likely drive home loan interest rates for the coming weeks.
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Mortgage interest rate and real estate news from last week:
Talks of the fiscal cliff issues continue to dominate the newswires and the mindsets of traders. The past week has seen mortgage backed securities hold strong near historic lows and above the 50 day moving average. The volatility picked up last Tuesday as progress was reported surrounding the fiscal cliff issues. The positive rumored news immediately helped Stocks rally over 200 points, taking the wind out of the sails of mortgage backed securities. This was just a glimpse of how big of an impact the fiscal cliff news will be going forward. The good news for home loan rates came when they were able to hold on to support at the 50 day-moving-average, proving this level to be a very strong floor of support and a benchmark worse-case scenario for the near-term.
What’s coming up this week on the economic calendar and what’s the impact on interest rates?
All eyes and ears will continue to be on news coming from the Fiscal Cliff talks. It’s all a matter of raising revenues and reducing costs, unfortunately for homeowners and prospective home buyers, eliminating the mortgage interest tax deduction would be a major source of tax revenue. If any changes are made to the tax deductions of mortgage interest, they are likely to be phased out over many years.
With the fiscal cliff talks ongoing, the economic calendar is full of employment and jobs data. Starting on Wednesday with the release of the ADP National Employment Report and rounding out with the Jobs Report on Friday, there is little ‘good’ news expected. Given the impact of storms on the East coast, there will likely be an increase in the Unemployment Rate and Initial jobless claims.
Here’s our strategy for the days and weeks ahead…
As home loan rates hover near historic lows and above support at the 25 and 50 day moving average, home loan rates are not expected to make a large move in either direction. As trading slows into the holiday season, any volatility that would drive home loan rates is likely to come from the fiscal cliff talks. We will recommend to cautiously float interest rates in the near term. However, should Congress find a resolution and back away from the cliff, expect the volatility to resurface at the possible expense of an increase in mortgage rates.
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.
