Helping Washington State homeowners learn more about their mortgage options.
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:
On Wednesday, we’ll have the results of the Fed Meeting which is sure to influence mortgage rates as traders wait for clues as to what the Fed plans to do with quantitative easing. It is not anticipated that the Fed will make any changes to the Fed Funds rate at this meeting. Ben Bernanke will be holding a press conference on Wednesday following the Fed Meeting.
Here are some of the economic indicators scheduled to be released this week:
Remember, mortgage rates are based on mortgage backed securities (bonds) and when the stock market is rallying, mortgage rates tend to deteriorate as investors will trade the safety of bonds for the potentially stronger return found with stocks. The reverse is also true.
Want more details? Check out this week’s issue of Mortgage Market Guide Weekly.
If you would like me to provide you with a mortgage rates quote for your refinance or purchase for a home located anywhere in Washington state, where I’m licensed, click here.
This morning, mortgage rates continue to take a hit from yesterday’s comments by Mr. Ben Bernanke before and after the Fed minutes were released.
Prior to the minutes being released, it seemed as though Ben was letting the cat out of the bag by eeking information regarding the economy, QE3 and the continuation of keeping mortgage rates at their artificial lows. Bernanke had stated that bond buying would continue until labor markets improved, which the bond market favored.
The minutes were released revealing mixed views on when the Fed should pull back on buying bonds, like mortgage backed securities:
“Participants also touched on the conditions under which it might be appropriate to change the pace of asset purchases. Most observed that the outlook for the labor market had shown progress since the program was started in September, but many of these participants indicated that continued progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases would become appropriate. A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome. One participant preferred to begin decreasing the rate of purchases immediately, while another participant preferred to add more monetary accommodation at the current meeting and mentioned that the Committee had several other tools it could potentially use to do so. Most participants emphasized that it was important for the Committee to be prepared to adjust the pace of its purchases up or down as needed to align the degree of policy accommodation with changes in the outlook for the labor market and inflation as well as the extent of progress toward the Committee’s economic objectives. Regarding the composition of purchases, one participant expressed the view that, in light of the substantial improvement in the housing market and to avoid further credit allocation across sectors of the economy, the Committee should start to shift any asset purchases away from MBS and toward Treasury securities….
….In their discussion of monetary policy for the period ahead, all but one member judged that a highly accommodative stance of monetary policy was warranted in order to foster a stronger economic recovery in a context of price stability. The Committee agreed to continue purchases of MBS at a pace of $40 billion per month and purchases of longer-term Treasury securities at a pace of $45 billion per month, as well as to maintain the Committee’s reinvestment policies….”
In the Q&A following the release of the FOMC minutes, Ben Bernanke commented that if economic conditions continue to improve, that bond purchases could be tapered by the next Fed meeting in June or July. This caused mortgage rates to trend higher… and today, that trend is continuing.
If you’ve been considering refinancing at a historic low rate, you may want to take action soon! Once the Fed stops manipulating mortgage rates, they’ll be closer to current jumbo/non-conforming rates.
I’m happy to help you with your refinance or purchase on your home located anywhere in Washington state.
This week is jam packed with economic data that may move mortgage rates, including the Fed meeting wrapping up on Wednesday and Friday’s Jobs Report.
This morning’s PCE came in with inflation continuing to be tame (good news for bonds, like mortgage backed securities). And more good news for housing, Pending Home Sales for March came in much stronger than expected.
Here are some of the economic indicators scheduled to be released this week:
Monday, April 29: Personal Consumption Expenditures and Core PCE; Pending Home Sales
Tuesday, April 30: Employment Cost Index (ECI); S&P/Case-Shiller Home Price Index; Chicago PMI; Consumer Confidence
Wednesday, May 1: ADP National Employment Report; ISM Index; FOMC Meeting
Thursday, May 2: Productivity and Initial Jobless Claims
Friday: The Jobs Report; ISM Services Index
As I get ready to publish this post (9:30 am) the DOW is up 94 points at 14,806 and mortgage backed securities are up 12 bps (FNMA 30 year 3.0%).
If you want to keep current with the results from the economic indicators for the rest of this week, you can follow me on Twitter @mortgageporter or Facebook.
Of course if you are considering buying or refinancing a home located in Everett, Edmonds, Enumclaw or anywhere in Washington state, where I’m licensed, I’m happy to help you – click here for a mortgage rate quote.
Mortgage rates continue to remain at historically low levels. Homeowners who have not recently refinanced may want to contact their mortgage professional to see if they can reduce how much they’re paying on interest.
Something that’s not staying low in the Seattle/King County area is home prices. The Seattle Times reports that in March, home prices are up 20% year over year. The median price for a home sold last month in Seattle jumped to $462,375. This is largely due to a lack of inventory. If you’ve been considering selling your home, now may be a good time.
Here are some of the economic indicators scheduled to be released this week:
Wednesday, April 10: FOMC Minutes
Thursday, April 11: Initial Jobless Claims
Friday, April 12: Retail Sales; Producer Price Index (PPI); Consumer Sentiment Index (UoM)
Also important to note: there has been some confusion as to the recent changes to mortgage insurance premiums on FHA loans regarding when the coverage terminates. FHA mortgage insurance will not become permanent until June 2013 and impacts newly originated FHA loans only with case numbers issued after May 31, 2013.
If I can help you with your home purchase or refinance for your home located anywhere in Washington state, please contact me. Have a great week!
Today wraps up the two day FOMC meeting with the Fed statement due around 11:00 am PST followed by a press conference featuring none other than Ben Bernanke. A change to the Fed Funds rate is not anticipated. Investors will be parsing through the press release and what the Fed Chair has to say about quantitative easing. The Fed has been hands on with keeping mortgage rates at artificial lows with their purchase of mortgage backed securities.
As I write this post (7:30 am on March 20, 2013) the DOW is up 75 bps at 14531 and MBS are down about 19 bps.
3.625% for a 30 year fixed rate (apr 3.730) is priced with 0.479 in discount points for a 45 day lock.
Stay tuned – I’ll try to do an update to this post throughout the day and we’ll see if what the Fed says influences mortgage rates today.
UPDATE: No surprises here. The Fed leaves rates unchanged and plan to continue to manipulate mortgage rates until unemployment improves. From the FOMC statement:
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.
As of 11:27 the DOW is up almost 85 points and MBS are down about 15 bps. No significant change since this morning.
12:55 pm: MBS down 37 points.
Yesterday the Fed released minutes from last month’s FOMC meeting. The minutes reveal the committee is debating easing or ceasing the purchase of mortgage backed securities before the end of this year.
A number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.
The Fed cannot continue to keep mortgage rates at their manipulated lows forever. Industry experts estimate that if the Fed was not involved with keeping mortgage rates low with the buying of mortgage backed securities, rates would be closer to “jumbo” rates (about a full point higher in rate).
Other points I of interest from the minutes – at least to me 🙂
…some participants were concerned that the recent increase in the payroll tax could have a significant negative effect on spending, particularly on the part of lower-income consumers.
Effective the beginning of this year, did you notice your pay check is 2% less? Congress allowed the expiration of the payroll tax cut to expire during the “fiscal cliff”. During 2011 and 2012, Americans caught a break and only paid 4.2% of their incomes for social security; we’re now back to paying 6.2%. If your monthly gross income is $5000, then your monthly take home pay is $100 less than what you had before this payroll tax.
If you’re a home owner who has not refinanced in the last year, you may want to contact your local mortgage professional to see if it makes sense. Reducing your mortgage rate can help off set the payroll tax and reduce the amount of interest you’re paying on your mortgage. Click here if you would like a rate quote for homes located anywhere in Washington state.
Participants remarked on the ongoing recovery in the housing market, pointing variously to rising house prices, growth in residential construction and sales, and the lower inventory of homes for sale. A number of participants thought it likely that higher home values and low mortgage rates were helping support other sectors of the economy as well, and a couple saw the housing market as having the potential to cause overall growth to be stronger than expected this year…
In the greater Seattle area, home prices continue to increase and I’m hearing from home buyers that they wish there was more inventory to chose from. If you’ve been considering selling your home, this could be a good time to meet with a real estate agent. If you need me to refer one to you, I’m happy to do so!
….Nonetheless, it was noted that mortgage credit remained tight and the fraction of homeowners with mortgage balances exceeding the value of their homes remained high.
Those seeking a mortgage, whether it’s for refinancing or buying a home do need to qualify and it is a “full doc” process. However, it’s not impossible. You need to be prepared to provide all income and asset documents, have steady employment and good credit. If you are considering buying a home (or even refinancing) in the next 12 months, I recommend starting with a preapproval now.
Home owners who are still upside down with the loss of their home equity may still be able to take advantage of today’s low rates if:
If you are looking at buying a home or refinancing anywhere in the state of Washington, I’m happy to help you!
The stock and bond markets are closed today in observance of President’s Day. Here are a few of the economic indicators scheduled to be released this week.
Wed. February 20: Building Permits; Producer Price Index (PPI); Housing Starts; FOMC Minutes released
Thurs. February 21: Consumer Price Index (CPI); Initial Jobless Claims; Philadelphia Fed Index; Existing Home Sales
Watch for signs of inflation from the PPI or CPI, which tends to drive mortgage rates higher. Wall Street will also be paying close attention to the FOMC minutes.
Happy President’s Day!
Rhonda Porter is a Licensed Mortgage Originator MLO121324 living in the greater Seattle area. Rhonda began her career in 1986 in the title and escrow industry and began her mortgage career in 2000. She enjoys helping people understand the mortgage process and started writing The Mortgage Porter in late 2006. Read More…
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