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.
Mortgage rates continue to be at very low levels. Although they’re not at the lows from May, Freddie Mac’s Mortgage Market Survey reports that mortgage rates have been trending lower for the last four months. If you missed the refi-boat a few months ago, this may be your second chance. You may want to contact a local licensed mortgage professional for an updated mortgage rate quote (if your home is located anywhere in Washington state, I’m happy to help you).
This week’s calendar appears to be on the light side. Mortgage rates will be taking ques from the from stocks. All eyes will be on Congress with their vote on whether or not to be taking action against Syria.
The Treasury will start selling $65 billion in notes and bonds on Tuesday, which may also impact rates.
Here are the economic indicators scheduled to be released this week:
With conforming mortgage rates trending higher largely due to the end of Fed’s support of keeping mortgage rates at QE artificially sweet low levels, we’re seeing less difference between conforming mortgage rates and non-conforming mortgage rates (aka Jumbo mortgages). In most Washington state counties, a jumbo mortgage is any loan over $417,000 (for a single family dwelling). In the greater Seattle area (King, Pierce and Snohomish counties) we have “conforming high balance” mortgages which will allow loan amounts from $417,001 to $506,000 before it’s considered a non-conforming (or jumbo) mortgage. Here’s a link to 2013 Washington State conforming loan limits.
It’s not only economic indicators that may impact the direction of mortgage rates, world events, such as what’s going on in Syria, may also cause rates to go down or up. This is because mortgage interest rates are based on mortgage backed securities (bonds) and when their is uncertainty in the world, investors may seek the safety of bonds, which tends to cause mortgage rates to improve. Remember, as the stock market improves, investors will trade the safety of bonds (like mortgage backed securities) for the potentially quicker returns found in stocks.
I thought it would be interesting to share a historic snapshot of where rates have have been based on a national annual average back to when I began my mortgage career in 2000.
The chart below is based on a 30 year fixed conventional as reported by Freddie Mac. NOTE: 2013 is not on the chart below because this is based on “annual” averages.
Today, as of 8/8/2013 at 9:00 am, I’m quoting 4.500% (apr 4.598%) priced with 0.304 points. Mortgage rates are currently hanging around back to 2011 levels. As you can see, mortgage rates are still historically very low.
In fact, back when I bought my first home in 1988, the average annual mortgage rate was 10.34 with 2.1 points!
My point is, rates are still historically low and won’t stay this low forever.
If you would like me to provide you a rate quote for your home purchase or refinance on property located anywhere in Washington state, please click here.
We have a very light calendar this week with only two scheduled economic indicators being released.
- Monday, August 5: ISM Services Index
- Thursday, August 8: Initial Jobless Claims
Don’t let this light calendar lull you into thinking it’s going to be a calm week for mortgage rates. With summer time in full swing and lighter volumes due to traders enjoying a summer vacation, we may see volatility with the direction of mortgage rates.
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.