Mortgage Rates Today…..

Well, we told you earlier that the retail sales report would probably push rates up.    Now that I’ve got today’s rates, here’s an overview of the changes from yesterday:

• 30 year Fixed under $417,000 – no change from yesterday.
• 15 year fixed under $417,000 – a minor increase.
• 30 year fixed over $417,000 – a minor increase
• 15 year fixed over $417,000 – a minor increase
• 30 year fixed FHA – a .125% increase in rates

So, rates didn’t jump as much as it appeared they would.    Why’s that?   The University of Michigan Consumer Sentiment Survey came in worse than expected.   The market had expected that it would come in the same as the last report but it dipped down.    Apparently consumers aren’t real confident that government policies will help the situation.

U.S. Consumer Sentiment declined in March.

U.S. consumer sentiment declined slightly in early March, with Americans less positive about the job outlook, a survey released Friday showed.

Shaun Curry | AFP | Getty Images

 

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The reading, however, stayed close to its six-month average, and was significantly above the year-ago level, according to Thomson Reuters/University of Michigan’s Surveys of Consumers.

The preliminary March reading for the surveys’ overall index on consumer sentiment was 72.5, down from 73.6 where it ended in February, and below the 73.6 forecast by analysts polled by Reuters.

In early March, consumers were expecting no change in the national rate of unemployment, which stands at 9.7 percent, for the rest of 2010, and were losing confidence in help from government economic policies.

"In recent months there has been a noticeable loss of confidence in current economic policies," Richard Curtin, director of the surveys, said in a statement.

So, the report was better than last year, which reinforces the “back from the brink of disaster” mentality.    But it’s hardly a glowing report.

That makes it more likely that the retail sales report for February was a “statistical anomaly” and not truly a sign of an improved market.    That took some pressure off rates for the morning.

Retail Sales Look Strong – puts pressure on mortgage rates?

Sales at U.S. retailers rose unexpectedly in February despite a drop in vehicle purchases and inclement weather that was expected to curtail shopping, according to a government report on Friday that bolstered hopes of a sustainable economic recovery.

The Commerce Department said total retail sales rose 0.3 percent as consumers bought an array of goods from necessities to luxury items. Sales for January were, however, revised down to only a gain of 0.1 percent from the previously reported 0.5 percent rise.

Analysts polled by Reuters had forecast retail sales slipping 0.2 percent last month. Compared to February last year, sales were 3.9 percent higher.

via Retail Sales Look Strong as Consumer Makes Comeback – CNBC.

This doesn’t bode well for mortgage rates…..

Why?   A couple of things:

• An increase in retail sales can mean an increase in the likelihood of inflation.
• An increase in retail sales can mean that the economy is turning around.
• Evidence that the economy is turning around can mean that the government is going to withdraw their subsidies of the financial markets sooner and that will send mortgage rates higher.

I’ll let you know what rates look like when I get them later this morning, but I expect them to be higher…….

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Upward Pressure on Mortgage Rates…..

Bloomberg has the story about how the Treasury yield curve is steepening.     So what difference does that make?   A couple of quick points:

• It means that short term money is significantly cheaper than longer term money.   If you want to borrow for money for 2 years, it’s a lot cheaper than if you borrowed money for 10 years.
• The main reasons are the fear of inflation and the fear of the tsunami of debt that is going to be hitting the markets as the government needs to pay for all of the bailouts and the stimulus funding that they’ve had to do.
• It means that the financial markets are starting to take it seriously that the Fed is actually going to stop buying mortgage backed securities and that’s going to begin putting pressure on mortgage rates.

So, what does it mean for mortgage rates?  A couple of things:

• They probably won’t be going down.
• Barring any dramatic movements in the market, the overall trend will probably be a slow increase in rates, not a huge spike upward.

My recommendation – if you need a mortgage within the next 60 days, the odds are stacked against rates being cheaper in a month than they are now, so get it while you can.

Tom Vanderwell

Treasury Yield Curve Steepens to Record Amid Growth Outlook – Bloomberg.com

The Treasury yield curve, a barometer of the health of the U.S. economy, widened to a record as investors bet an accelerating recovery will fuel inflation and hurt demand for unprecedented sales of government debt.

The difference between 2- and 10-year Treasury note yields increased to 282 basis points before the government announces Dec. 23 how much it plans to auction in 2-, 5- and 7-year securities next week. It rose from 145 basis points at the beginning of the year, with the Federal Reserve anchoring its target rate at virtually zero and the U.S. extending the average maturity of its debt. A report tomorrow is forecast to show the world’s largest economy expanded in the third quarter.

Technorati Tags: Treasury Market, Mortgage Rates

Want some insights into where Rates Are going?

Every week, I’m a participant in Bankrate.com’s weekly Mortgage Rate Trend Index.  It’s a survey of many loan officers and those in the business and their opinions on what rates are going to do over the next 35 to 45 days.

Remember, those opinions might not be applicable for your individual situation.   Call me at (616) 292-7559, e-mail me at tvanderwell@straighttalkaboutmortgages.com or fill out that rate quote form on the right hand side and let’s discuss it.

Thanks!

Tom Vanderwell

December 16 – What the Fed Said

Mortgages and the Fed

When This Chart Gets to $1,250,000,000,000 – Mortgage Rates Are Going to Go Up….

So what does this chart represent?   The Fed’s purchase of mortgage backed securities.   They committed last spring to spending $1.25 Trillion worth of our money buying mortgage backed securities and originally planned on doing it by November.    They then decided to “ease” out of things and take until March to do it.

Rates at that point dropped by .375% overnight and have since dropped further.    I’ve read a variety of analysts predictions that rates will go up by anywhere from .25 to 1.25% when the Fed steps out of the market.   My personal opinion is that we aren’t going to see a dramatic reversal, but rather a slow increase once it becomes evidence that they aren’t going to extend it out further than they already have.

Tomorrow’s Federal Reserve Open Market Committee meeting (which is held behind closed doors) will potentially give some insight into the question of whether, how long, how far they might extend or shorten their market stimulus.   My prediction is that we won’t see them make any dramatic moves but reaffirm that they’ll be done in March.    I also don’t anticipate we’ll see the effects of the market dealing with a huge buyer leaving the marketplace until well after the New Year when we get closer to them really being finished.

Stay tuned and if I can help, let me know.

Tom Vanderwell

Mortgage Market Update

Well, we’re less than an hour into the markets today and it’s time to take a look at what’s happening…..

• So far, rates are staying quite steady.    Not a lot of news going on so far this morning.
• Dubai got a “bandaid bailout” to keep them from totally drowning, but from what I hear, they have approximately $35 Billion in loans that need to be refinanced in the near term with virtually no one wanting to loan them money.
• Exxon/Mobil is buying another energy company with part of your and my hard earned money.
• The President is going to slap the hands of a bunch of Wall Street execs.   Does anyone expect that it will really make a difference?   Anyone?   Speak up if you do…..

So, rates are steady for now.    As I said earlier, it could be a very volatile week, but I don’t expect any significant changes in the overall direction of the markets.

Stay tuned and keep in touch.

 

Tom Vanderwell

The Week Ahead

So, last week was a relatively light one in terms of economic news.   This week will be a bit heavier…..

• Tuesday – The Housing Market Index, Industrial Production and Capacity Utilization.
• Wednesday – Housing Starts and Architecture Billings Index for CRE (Commercial Real Estate), the Fed’s meeting announcement, CPI (Consumer Price Index)
• Thursday – The Philly Fed Index

So what do they mean and what impact will they have?

First – Anyone who tells you they know is lying.

Secondly, here’s what I think is going to happen……

• All of the reports except the Fed are going to come in lukewarm.   Those with positive outlooks on things will be able to find something to be happy about.   Those with realistic pessimistic outlooks on things will find things that they can point to in order to say that things aren’t going well.
• The Fed will issue their report and talk about how good they think the economy is looking.   The markets won’t believe them.
• We’re going to end up with a very volatile ride this week, but by the end of the week, there won’t be anything that has a substantial impact on mortgage rates.

Therefore, my prediction for the week is that we’ll see a LOT of interest rate volatility but it will be mainly noise and we won’t see any substantial movement either up or down.

Let’s see at the end of the week whether I was able to predict the market any better than the weather people in Michigan can predict the weather!

Tom Vanderwell

Pending Home Sales, Dubai and the ISM – their impact on rates?

Technorati Tags: Pending Home Sales, Mortgage Rates

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