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Consumer spending drives the economy. Without spending, there's no growth and, as a result, tepid retail sales reports force Wall Street to rethink its bets on U.S. economic recovery.It's a primary reason why rates return to 5 percent again and again. The economy is back from the brink -- banks are healthier, investment is returning, household net worth is up -- but consumers continue to stand en garde. Confidence is down.A recovery is not a recovery until consumers buy-in. Literally. And, right now, that's not happening.
Lately, mortgage bonds have been trading at unsustainable levels. Despite a growing mound of evidence that the economy is expanding and what looks to be an over-supply of treasury debt, mortgage-backed securities are priced as high as they've been since May. It's unnatural, really; a hedge against a stock market flop. Or something else. But forget about why rates are low -- low rates are about to end.
It's been a good few weeks for mortgage rates. While Wall Street waits for definitive data on the economy, traders have tended to take safe positions in the mortgage-backed securities market. Traders appear to believe the Federal Reserve's assessment about the economy picking up, but, nonetheless, they're making careful hedges with their bets. Furthermore, inflation appears contained (for now) and the U.S. dollar is recovering from its late-Summer beatdown. It's all helped push mortgage rates to their lowest levels since around the time the Phillies first took first place.
With Summer over and trading volume back to full strength, the market is turning a corner. It's increasingly clear that economy bottomed out sometime between February and May and Wall Street is no longer waiting for the other economic shoe to drop. Fed Chairman Ben Bernanke validated this position, saying the recession is "very likely over".
Are mortgage rates going up? Are mortgage rates going down? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction. Here's what I told Bankrate.com: "Demand for dollars-denominated bonds helps rates to ease lower."
Mortgage markets are a sensitive beast. Just the slightest breeze and they're all shook up. It's one reason why this blog covers such a wide berth. Jobs, housing, consumer confidence, spending -- it's all relevant. Each moves markets in its own right. And when mortgage markets move, mortgage rates move.
Are mortgage rates going up? Are mortgage rates going down? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.
5 weeks ago, Wall Street was mostly convinced that the economy was about to turn a corner. At the time, traders were piling into the stock market, chasing big gains and selling everything risk-averse. Mortgage bonds were in very low demand and the supply glut pushed rates north of 6 percent. Since then, the world has calmed down a bit. Housing and manufacturing continue to show strength, but some key pockets of economic weakness have poked investors into taking some profits off the table. The Dow has since shed some of its gains since March and the action is causing mortgage bonds to improve.
today, mortgage rates are still higher than the government's "ideal" sub-5 percent level, but Wall Street isn't worrying about inflation as much. Data has improved in a lot of sectors, but it can't necessarily be categorized as "strong". Plus, gas prices are falling. Both of these developments are making a positive impact on mortgage rates and should continue to pressure rates lower over the next few weeks. All of that said, however, all it takes is one shock to the system and mortgage rates will blow right past 6 percent and won't look back.
Putting two-and-two together, I'm telling you for the last time: If mortgage rates get too close to 7 percent, the Federal Reserve will likely to accelerate the pace of its bond buys and may increase its commitment to the markets, too. At least temporarily, this would drive mortgage rates down in a hurry.
Are mortgage rates going up? Are mortgage rates going down? get that interest rate. "Points", you may not know, is industry shorthand for "discount points" and it's expressed as a percentage of the amount borrowed. As an for-instance, 1 point on a $325,000 mortgage would cost $3,250. When it comes to shopping for, or reporting on, mortgage rates, most people forget about the "points" part of the equation. You probably even do it yourself. When you ask a mortgage guy, for example, "What're rates doing today?" you're completely discounting the question's second half. This chart illustrates it.
I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available. The Bankrate.com survey is for conforming mortgages. It does not apply to FHA mortgages, VA mortgages, jumbo mortgages, or foreign national mortgages. For rate quotes, email me directly. The group's 30-day...
For today's mortgage rate shopper, there's a lot going on with the economy, It's too much to pay attention to, really. And, on the surface, while most of the news has been decidedly negative, we're witnessing a gentle shift in trader psyche on Wall Street.
Mortgage markets have been a veritable mess lately. Rates want to move up, the government wants them to move down. It's reduced us to ia Mortgage Rate Tug-o-War between economic fundamentals and political rhetoric.
I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available. The Bankrate.com survey is for conforming mortgages. It does not apply to FHA mortgages, VA mortgages, or jumbo mortgages. For rate quotes, email me directly. The group's 30-day prediction for mortgage...
I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available. The Bankrate.com survey is for conforming mortgages. It does not apply to FHA mortgages, VA mortgages, or jumbo mortgages. For rate quotes, email me directly. Here are the group's 30-day mortgage...
I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available. The Bankrate.com survey is for conforming mortgages only. It does not apply to FHA mortgages, VA mortgages, or jumbo mortgages. However, I do lend on all of these loan types in...
