Market Insight, Mortgage News, Mortgage Rates

The Week Ahead for Mortgage Rates: December 31, 2012

December 31, 2012 by · Leave a Comment 

Jobs report is due Friday and could move mortgage ratesMortgage bonds improved last week, pushing mortgage rates lower in Northwest Indiana and nationwide.

Positive economic news and strong housing data was trumped by ongoing Fiscal Cliff discussions on Capitol Hill.

The “Fiscal Cliff” is meant to represent January 1, 2013 — the date on which mandatory spending cuts are enacted by Congress and on which tax rates increases for many U.S. taxpayers.

Click here to see today’s mortgage rates.

Some analysts believe that if these two events are to occur simultaneously, it would derail the current U.S. economic expansion and revert the economy back into recession. That concern has spurred a flight-to-quality which has benefited mortgage bonds and, therefore, U.S. mortgage rates.

For example, last week, Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.35 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points plus a full set of closing costs. This is a 0.02 percentage point reduction from the week prior.

The average 15-year fixed rate mortgage rate was unchanged last week at 2.66 percent for borrowers paying an accompanying 0.7 discount points plus closing costs.

Click here to see today’s mortgage rates.

In this holiday-shortened week, mortgage rates may fade again.

Congress convened over the weekend in order to discuss the impending Fiscal Cliff, and ways to avoid it. Talks have been ongoing since this year’s election yet it appears unlikely that the simultaneous expiration will be avoided.

How this would affect the economy is unknown but mortgage markets would witness an immediate boost of demand, leading Northwest Indiana mortgage rates lower. Conventional, FHA and VA mortgage rates would all likely benefit.

Click here to see today’s mortgage rates.

And then, Wall Street will turn its attention to Friday’s December Non-Farm Payroll report.

Mortgage rates are expected to make big moves upon the report’s release. This is because, earlier this month, the Federal Reserve said it would begin raising the Fed Funds Rate only after the Unemployment Rate reaches 6.5 percent. Currently, the Unemployment Rate is 7.7 percent.

If December’s jobless rate slips, moving closer to the Fed’s stated target, mortgage rates are expected to rise. Similarly, if the Unemployment Rate rises, mortgage rates are expected to drop.

This is The Week Ahead for Mortgage Rates: December 31, 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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