Mortgage rates eased some more last week, and according to the latest issue of HSH’s Market Trends Newsletter, “there doesn’t seem to be an economic report [out this week] which might cause a measurable firming for rates.” At the moment, any pessimistic economic outlook should work to the advantage of potential homebuyers and refinancers:

Now that the holiday season is behind us, the resumption of more regular activity will again start to reveal how the market perceives prospects for growth and inflation. If the stock and bond markets movements [last] week were any indication, there has been some fading of optimism about growth and concerns about inflation.

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Mortgage rates rose again during the holiday-shortened week, according to the latest issue of HSH’s Market Trends Newsletter, “Mortgage Rates Move Higher.”

Although last week’s move upward marked the third consecutive weekly increase, “It’s important not to make too much of the flare in rates“:

Holidays are now in full swing, markets are thinly populated and traded, and exaggerations in market moves are common. Some of the rise in yields [last] week appeared to be money shuffling from bonds and into equities to take advantage of any “Santa Claus” rally in stocks. Since there has been a four-day “winning streak” it would seem that this is the case at the moment.

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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

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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’”

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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.”

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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.”

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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.”

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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.”

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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.”

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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.”

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