I’m pleased to welcome mortgage professional Brian Cav, the creator of a great mortgage blog called Smarterborrowing.com. Brian was nice enough to give us his weekly mortgage rate report which I’m sure you’ll find interesting.
Mortgage Market
How did the FOMC meeting affect mortgage rates? Pricing actually got a bit better, both benchmark treasury yields and MBS prices improved after the FOMC statement was released. 30 year conventional mortgage rates are in the 4.75% to 5.125% for well qualified borrowers. If you are presently being quoted these mortgage rates and are closing in the next 15 to 45 days I like LOCKing these rates in. Could this small rally extend?
Economic Data
Yesterdays FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. This was widely expected, but the post-meeting statement did cause some discussion. The Fed left the language in the recent statements that indicate that rates will remain near current levels for some time. This is good news for the bond market and mortgage rates as it means that the Fed is still concerned about an economic recovery.
There is little doubt that the Fed has to raise rates sometime in the future. The question is when. Some analysts feel that it has to be sooner than later to prevent other economic issues down the road. The ultimate goal is for the economy to gradually strengthen so Mr. Bernanke and company can slowly raise interest rates. Raising rates too soon could dampen economic activity by making borrowing more expensive for businesses and consumers. However, waiting too long to raise them could let inflation build momentum, leading to a rapid increase in key rates that also undermines economic growth.
Yesterday’s statement pretty much reiterated recent ones that hint the increases will be later than sooner. Some market analysts believe that is a mistake and that rates need to be raised this year. Others think the employment and housing sectors are still too weak to start raising rates. Who is correct? The future will show us, but in the meantime the debate will continue.
The bond and stock markets have improved from where they were before the statement was released. I would not be surprised to see a small downward revision to mortgage rates shortly as a result of the bond market strength. However, many lenders may opt to wait until tomorrow morning’s rates to reflect that improvement.
February’s Housing Starts was this morning’s only relevant economic data. The Commerce Department reported that construction starts of new homes fell 5.9% last month. This data is not considered to be greatly important to the markets or mortgage rates, so its impact on this week’s trading has been / will be minimal.
LOCK / FLOAT
If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK/FLOAT
If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK
If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK
If I was closing on a Home Mortgage in the next 60+ FLOAT
This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
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Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline
Thanks Brian! Hopefully, you’re weekly report will be a regular feature here on the Blog.
