Market Insight, Mortgage Rates

The Week Ahead for Mortgage Rates: August 6, 2012

August 6, 2012 by · Leave a Comment 

Attractive Woman Holding Hired Sign by courtneyk | iStockphoto.comMortgage bonds worsened last week. A series of non-action from the world’s central banks — including the Federal Reserve — plus a better-than-expected jobs report pushed mortgage rates to their highest levels in more than a month.

Conforming mortgage rates rose in Schererville Indiana and nationwide last week.

The week wasn’t without drama, however. Mortgage rates carved out a wide range.

Click here to see today’s mortgage rates.

When the week opened, mortgage markets were in a rally mode. The European Central Bank had previously said that it would do whatever was needed to preserve the European Union. However, details failed to emerge on that plan, leading to a “risk off” scenario in which investors moved money into the relative safety of bonds, a class which includes mortgage-backed securities.

Mortgage rates dropped Monday and Tuesday.

Then, Wednesday, beginning at 2:15 PM ET, mortgage rates spiked. The timing coincides with the end of the Federal Open Market Committee’s scheduled 2-day meeting and its statement to the markets. In it, the Fed said it will leave the Fed Funds Rate unchanged in its target range of 0.000-0.250%, and that it will not add new stimulus to the markets or the economy.

Click here to see today’s mortgage rates.

Wall Street had expected the Federal Reserve to launch new support for bond markets and, when the Fed chose against it, bond markets sold off, sending mortgage rates higher.

Thursday, mortgage rates, once again, slipped. This occurred after the European Central Bank emerged from a meeting with no clear plan to “save the Euro”. Markets believe the ECB will take some action, but because that action won’t happen right away, investors once more poured into the relative safety of mortgage bonds.

Lastly, the U.S. Non-Farm Payrolls report on Friday showed 163,000 net new jobs added in July, far exceeding analyst expectations of 100,000 net new jobs. The surprise result sent stock markets soaring and bond markets sinking. 30-year fixed rate mortgage rose all day, and is now at its highest level in close to 6 weeks.

Click here to see today’s mortgage rates.

Freddie Mac reported the 30-year fixed rate mortgage at 3.55% last week. It’s higher than that now.

This week, there isn’t much economic data on which for markets to move so expect to see rhetoric and momentum take center stage. Fed Chairman Ben Bernanke makes two public appearances and Eurozone leaders will continue to be in the news.

If you’re floating a mortgage rate right now, a prudent move may be to lock it.

This is The Week Ahead for Mortgage Rates: August 6, 2012.

Click here to see today’s mortgage rates.

Quick general rule of thumb when keeping an eye on mortgage rates.

Strong Economic News: $$$ from Bonds —> Stocks = Home Loan Rates Go Up

Weak Economic News: $$$ from Stocks —> Bonds = Home Loan Rates Go Down

If you or someone you know is thinking about buying a home, the combination of low home loan rates and affordable home prices make this an ideal time to buy a home. Want to know if you can afford a new home? Call or text me at 512-522-7284 to discuss your personal situation and your home loan options!

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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