While we wrote last Monday that “Mortgage Rate Stability May Not Last,” it appeared as though it did. Mortgage rates held steady last week as the stock market’s woes “did produce somewhat lower Treasury yields,” which could help mortgage rates trend downward this week.
Mortgage Rates
Last week when Federal Reserve Chief Ben Bernanke said that the recession is “very likely over,” it should have been just one more indication that mortgage rates will rise. As most of you know these aren’t typical times, and thanks to the Fed’s unprecedented actions over the past year, the latest issue of HSH’s Market Trends Newsletter — “‘Recession Over’ and Mortgage Rates” — predicts that rates will continue to behave.
“With economic news sporting a warmer glow for the past couple of months, Federal Reserve Chairman Ben Bernanke boldly claimed that the ‘recession is very likely over.’ It’s not unreasonable to assume that many people would respond with the query ‘So when does the recovery start’”
According to the latest issue of HSH’s Market Trends Newsletter, “Firmer Rates, Barely,” mortgage rates are hovering in the middle of the range they have been in for some time now. Since economic conditions are neither completely bleak or steadily improving, rates are “waiting to see where [they] go from here.”
“Subtle signs of economic improvement are gaining in number and frequency, but it’s all too easy to confuse a move back toward flatline growth as actual recovery, or to conclude that a rising trend is wholly sustainable. While we’re encouraged by the momentum away from emergency panic levels, risks to any nascent economic recovery remain, and real improvement is still in our future.”
According to the latest issue of HSH’s Market Trends Newsletter, “Mortgage Rates Ease Somewhat,” as we expected, mortgage rates eased back from their three-week run upwards. “A tempering of enthusiasm about how quickly the economy will resume a pattern of growth and no new auctions of Treasury Bonds contributed to the decline.”
“Overall, fixed mortgage interest rates declined by 13 basis points, according to HSH’s Fixed-Rate Mortgage Indicator, which includes rates for conforming, jumbo and expanded conforming loans. At 5.91%, rates remain quite favorable for potential homebuyers but probably not low enough to see refinancers lining up at lender offices. The overall average for 5/1 hybrid ARMs moved down by 11 basis points, landing at 5.33%. Conforming 30-year FRMs, perhaps the most important product in the market, slipped back by seventeen basis points for the week, while true 30-year FRM jumbos managed a decline of nine.”
According to the latest issue of HSH’s Market Trends Newsletter, “Interest Rates: Storm Over?,” the 10-year Treasury’s downshift on Friday served to, in the least, delay the rising trend in interest rates.
“After rising for several weeks, the storm for mortgage rates may be abating. With an intra-day runup which saw its yield above 4% for a time, the mortgage-influential 10-year Treasury downshifted to 3.79% by late Friday, shedding more than 20 basis points (0.20%) off the week’s peak. That may not presage a huge fall in mortgage interest rates, but should be sufficient to stop and at least partially reverse the upward trend.”
Just as we predicted in our last Market Trends Newsletter, improving economic conditions brought upward pressure to mortgage rates last week. According to the latest issue of HSH’s Market Trends Newsletter, “Firmer Economy, Firmer Rates,” even though would-be refinancers haven’t welcomed the higher rates, the upward pressure may actually help the economy.
“Investor money formerly stuffed into the safe haven of Treasury bonds is beginning to filter out into other areas of the economy, and the sooner that normalization takes place, the quicker the economy will experience actual recovery.”
According to the latest issue of HSH’s Market Trends Newsletter, fortunately for potential homebuyers, the narrow range in which mortgage rates have remained in for some time has been historically low.
“The national average 30-year fixed rate mortgage, as measured by HSH’s Fixed-Rate Mortgage Indicator (FRMI), fell to 5.43%, a five-basis-point drop that reflects the meanderings of the economy in general. The FRMI averages the prices of conforming, jumbo and expanded conforming products. The FRMI’s 5/1 Hybrid companion averaged 5.06% this week, just a few basis points above the conforming 30-year FRM.”
According to the latest issue of HSH’s Market Trends Newsletter, “No ‘Stress’ on Mortgage Rates,” as the economy slowly pieces together the components of a recovery, mortgage rates remain relatively stable at their current historic low.
“Everyone keeps scanning the horizon, hoping to see the good ship Economic Recovery that’s surely out there somewhere. There’s still no indication of just when our ship will come in, but some market watchers think they’re seeing, just maybe, the merest glimpse of that elusive vessel.”
According to the latest issue of HSH’s Market Trends Newsletter, “Home Loan Rates Drift Down a Little,” the anticipated economic recovery may bring inflation and higher rates along with it.
“Of course, that presupposes that the Federal Reserve will no longer be the largest component of support for the mortgage market, and that private market interests will be again asserting more influence into the price of credit. That day will come, but not yet.”
As subscribers of our weekly Market Trends newsletter know, we run a three-question survey for two to three weeks to gauge what our readers think of some interesting topic.
The most recent survey — which runs through Sunday night, so there’s still time for you to chime in — asked our readers “How About That Stimulus Tax Cut?”
