On a bi-monthly basis, HSH.com releases their Two-Month Forecast for Mortgage Rates. In each forecast, we review our previous prediction — evaluating the circumstances that caused rates to do what they did — and we examine current factors and conditions in order to forecast mortgage rates over the next nine weeks or so.

Each two-month forecast is made up of four parts: the preface, a recap of our previous prediction, the forecast discussion and finally the forecast itself. We’ll do a short summary of each section here on the blog, but be sure to visit HSH.com to read our entire forecast.

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For a mortgage blog, the subject of jobs has come up quite a lot here recently. The reason being, as noted here quite often, jobs play an essential role in maintaining the housing market’s health, vibrancy and sustainability. Steady jobs produce consumer confidence; it’s as simple as that. Consumers who have a steady paycheck are far more likely to buy and refinance. Also, if you’re employed, you are better suited to handle costs increases in everything from your monthly payment to an unexpected home repair.

The minutes from the Federal Open Market Committee’s (FOMC) latest meeting were released last week, confirming the important connection between jobs and housing: Read the rest of this entry »

When asked whether Washington would consider instituting another homebuyer tax credit, HUD secretary Shaun Donovan responded saying, “I think it’s too early to say after one month of numbers whether the tax credit will be revived or not. All I can tell you is that we are watching very carefully.” Donovan’s comments have created a whirlwind of speculation that the government will once again step in and distort an already-unbalanced housing market.

Striking a balance

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The Conference Board’s index of consumer confidence rang in above estimates for the month of April. The 12.3-point gain ousted expectations of a five-point increase — launching this month’s gain to the fourth highest in the index’s 32-year history.

April’s increase led to the index’s highest-monthly reading since last November. Despite opinions that current conditions remain weak, consumer outlook for the future are improving. The index’s expectations component rose by over 19 points to its highest reading since last September.

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US Industrial Production rose by a better-than-expected 0.2% in July, a mellow reading, yet still higher than recessionary numbers. Manufacturing gained 0.4% for the July, the best reading observed in 10 months. Strong showings in automobile production and mining canceled out a 1.9% drop in utilities. Motor vehicle output increased 3.6% for the month, recovering strongly from dismal numbers in the last couple of readings. Eliminating motor vehicle output, manufacturing rose just 0.1%, consistent with the year’s meager, yet positive readings.

The dollar is rising across the board, gaining strength as foreign economies begin to struggle. The dollar has risen 5% against the Euro in August alone, and rose against the yen this morning. If oil prices continue to fall, the dollar should strengthen even more.

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