Market Insight, Mortgage News, Mortgage Rates

The Week Ahead For Mortgage Rates: May 5, 2014

What’s Ahead For Mortgage Rates This Week – May 5, 2014Last week’s economic news included several reports related to housing and mortgages. The NAR started the week on a positive note with its Pending Home Sales Index released Monday. Pending home sales in March were higher with an unexpected increase of 3.40 percent over February for an index reading of 97.40.

This is encouraging news for home sales that were severely affected by a hard winter in many areas, and suggests that as warmer weather approaches, home sales will pick up. Analysts do not expect the rapid rate of price appreciation seen in 2013. The Fed’s tapering of its “quantitative easing” program has caused mortgage rates to rise, and last year’s rapid run-up of home prices has made affordability an issue in many areas.

The S&P Case-Shiller Home Price Index for February performed slightly better than expected with a seasonally-adjusted month-to-month reading of 0.80 percent. The expected reading was 0.70 percent.

The year-over-year reading fell short of January’s reading of 13.20 percent and the expected reading of 13.00 percent at 12.90 percent. Analysts noted the continuing trend of slowing momentum in home price growth, but seem confident that home prices will continue to increase over the spring months.

Fed Continues Tapering Of QE, Mortgage Rates Mixed

Wednesday brought the FOMC’s customary statement after its two-day meeting concluded. There were no surprises as the statement verified another monthly tapering of $10 billion from the Fed’s quantitative easing (QE) program of asset purchases.

The tapering was evenly divided with $5 billion less in MBS purchased and $5 billion less in treasury securities purchased. The ongoing tapering was seen as contributing to rising mortgage rates, but the Fed asserted that its asset purchases remain sufficient to dampen rapid increases in long-term interest rates, which include mortgage rates.

The Fed repeated its usual reminder that its decisions are not on a pre-set course and that the committee members would closely monitor economic and financial developments as guidance for future decisions.

Freddie Mac reported mixed results for mortgage rates on Thursday. Average rates rose by four basis points to 4.29 percent for a 30-year fixed rate mortgage with discount points of 0.70 percent.

The average rate for a 15-year fixed rate mortgage dropped by one basis point to 3.38 percent; discount points steady at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage rose by two basis points to 3.05 percent; discount points dropped from 0.50 to 0.40 percent.

Weekly jobless claims made an unexpected jump to 344,000 as compared to the prior week’s revised figure of 329,000 jobless claims and an expected reading of 320,000 new jobless claims.

Analysts note that week-to-week figures continued to show volatility, but said that on balance, the rolling average for jobless claims appeared consistent with moderate growth in labor markets.

What’s Coming Up In The Week Ahead For Mortgage Rates: May 5, 2014

This week’s scheduled economic news shows no events related to housing and mortgages. Highlights include Fed Chair Janet Yellen’s appearance before the Joint Economic Committee in Washington, D.C. and the usual releases of mortgage rates and new jobless claims on Thursday.

This Is The Week Ahead For Mortgage Rates: May 5, 2014.

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QUICK GENERAL RULE OF THUMB WHEN MONITORING 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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