This week’s calendar may seem on the lighter side with regards to economic indicators scheduled to be released. There are no economic indicator scheduled to be released this week. On Wednesday, the FOMC Minutes are scheduled to be released and this probably has the potential to influence the direction of mortgage interest rates. Remember, mortgage rates are based on bonds (mortgage backed securities) and often move in the opposite direction of stocks.
Yesterday wrapped up the Fed’s two day meeting and, as expected, there was no change to Fed Funds rate. They did announce in their statement they will ease off another cool $10 Billion per month starting in February of their mortgage backed security purchase program.
From the press release:
Last week mortgage interest rates improved thanks to Janet Yellen indicating at her confirmation hearing that as our next Fed head, she will continue on with QE and support the Fed’s actions of buying mortgage backed securities to keep mortgage interest rates artificially low. This was sweet news to the markets and we’re still seeing lower mortgage rates this morning.
This week is packed with data that may drive mortgage rates higher or lower, including the Fed meeting which wraps up on Wednesday. It’s highly unlikely the Fed will make any changes to the Fed Funds Rate. Traders will be waiting for clues on when tapering may begin (it’s estimated will be pushed out to March 2014). Remember, mortgage interest rates are based on bonds (mortgage backed securities – MBS) and change throughout the day, just like stocks do. It’s not unusual to have bonds react opposite of the stock market as investors will often trade the safety of bonds for the potential return found with stocks (and the reverse is true).
The Fed made no changes to the Fed Funds rate… no surprise there. However, the Fed did surprise the markets today announcing they are not tapering their purchasing of mortgage backed securities. From today’s press release:
“…Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. [Read more...]
I hope you are having a wonderful summer. Our Seattle summer has been just beautiful – I don’t even mind the few days of rain we’ve had sprinkled in. Anyhow, you’re not reading this post for a weather report, are you? Let’s get back to what may impact mortgage interest rates this week! Today and Tuesday, we don’t have any economic indicators scheduled to be released. Wednesday is the big day with the minutes from the last Fed meeting being released.
This week is packed full of economic data that may dramatically impact mortgage rates. Not only do we have the results of the Fed meeting on Wednesday, we wind up the week with the Jobs Report on Friday. I anticipate this will be another volatile week for mortgage interest rates.
This morning, mortgage backed securities are recovering from Friday’s fiasco following the better than expected Jobs Report. On Wednesday, the minutes from the last Fed meeting will be released which may set mortgage rates off on another roller coaster ride.
Here are some of the economic indicators scheduled to be released this week:
Wednesday, July 10: FOMC Minutes
Thursday, July 11: Initial Jobless Claims
Friday, July 12: Producer Price Index and Consumer Sentiment Index (UoM)
On Saturday, July 13: I’ll be teaching at a Home Buyer Education Seminar in West Seattle at the High Point Library from 11:00 am – 4:00 pm. If you would like to learn more about the home buying process or need help with down payment assistance, I encourage you to attend our Washington State Housing Finance Commission sponsored class!
As of 10:00 am this morning, July 8, 2013, the DOW is up 67 at 15,203. Mortgage rates are improved from Friday by about a 0.425% in fee (based on the 4.750% quote).
For a 30 year fixed rate based on a loan amount of $400,000 and an 80% loan to value with 740 or higher credit scores for a purchase in Seattle closing by August 15, 2013, I’m quoting:
- 4.625% (apr 4.796%) priced with 1.121 points; or
- 4.750% (apr 4.839%) priced with 0.182 points
Remember, mortgage rates change constantly and may have changed by the time I publish this post. For your personal rate quote with current pricing for your home located in anywhere in Washington, please click here.