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interest rates: What's Ahead For Mortgage Rates This Week : April 13, 2009 - 04/13/09 03:52 PM
For the second week in a row, mortgage markets started the week strong and then ended with a fizzle. In the holiday-shortened week, rates were exactly flat overall.
There wasn't much economic data to move rates last week, incidentally. The market's up-and-down action was largely based on two events:
A reputable analyst said banking-sector optimism may be premature Wells Fargo reported a record $3 billion in first quarter earnings It was the first item that dropped rates Monday and Tuesday; the second item, in part, led them back up.
This week, data returns.
Tuesday, we'll get a look at Retail Sales. Because consumer spending accounts for … (0 comments)
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interest rates: How To Know If Your Adjustable Rate Mortgage Will Adjust Lower - 04/09/09 10:31 AM
When conforming mortgages adjust, they're often tied to an interest rate index called LIBOR.
LIBOR is an acronym for London Interbank Offered Rate. But what LIBOR stands for isn't as important as the role it plays.
LIBOR is an interest rate at which banks borrow money from each other. Therefore, when banks feel the banking system as a whole is unsafe, LIBOR rises to compensate.
It's why LIBOR spiked last October after Lehman Brothers failed. Financial institutions wondered what other institutions would fail and that added risk to the system.
Since October, however, and because of massive government interventions worldwide, … (0 comments)
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interest rates: What's Ahead For Mortgage Rates This Week : March 2, 2009 - 03/02/09 01:50 PM
Mortgage markets worsened last week, taking interest rates with them.
A steady drip of sour economic news plus concerns about the banking system outmuscled Fed Chairman Ben Bernanke's congressional testimony in which he said the recession would likely end later this year.
Overall, mortgage rates have risen in 9 of the last 12 trading days.
This week, it's unclear in what direction mortgage rates will go. However, it won't be because of a lack of action.
The week starts with the 8:30 A.M. ET release of the Personal Spending report, a closely-monitored report that should make a broad market impact. Economists expect … (0 comments)
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interest rates: What's Ahead For Mortgage Rates This Week : February 23, 2009 - 02/23/09 01:15 PM
Traders brushed off Tuesday and Wednesday's passage of the American Recovery and Reinvestment Act and the President's mortgage relief plan, respectively.
It showed how unsure markets remain about the stimulus package and its probable impact on the economy.
As a result, mortgage markets worsened last week, albeit slightly. It marked the 4th week out of five in which mortgage rates rose.
However, there were a few notable new items for American homeowners and home buyers last week:
The signed-into-law stimulus package includes a first-time home buyer tax credit Additional banks joined the "no foreclosure" movement Fannie Mae re-opened guidelines so that real estate investors … (0 comments)
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interest rates: Why Credit Card Holders May Benefit from The Fed's Actions Today - 12/11/07 12:28 PM
The Federal Open Market Committee meets today and will release a public statement at 2:15 P.M. ET.
It is widely expected that the FOMC will lower the Fed Funds Rate by at least 0.250%.
When the FOMC lowers the Fed Funds Rate, it is trying to "loosen" credit for American businesses and consumers. When credit is "looser", it is cheaper, and easier to procure.
Looser credit promotes spending and propels the U.S. economy forward.
By contrast, when the FOMC raises the Fed Funds Rate, it is trying to "tighten" credit which, in turn, slows down the U.S. economy.
The … (2 comments)
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interest rates: The Week in Review (December 10, 2007): What to Watch For - 12/10/07 02:13 PM
Among lingering doubts about housing and credit markets, and a general uncertainty about the U.S. economy, the mortgage bond market tanked towards the latter part of last week.
As investors moved away from mortgage bonds, mortgage rates forcefully bounced off their two-year lows.
A major factor behind last week's run-up in rates is the market expectation for Tuesday's Federal Open Market Committee meeting.
Those expectations sharply shifted after Friday's strong employment report from the Census Bureau and dragged rates along with them.
Prior to the jobs report, markets were expecting that the FOMC would lower the Fed Funds Rate … (1 comments)
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interest rates: The Week in Review (October 22, 2007) : What to Watch For - 10/23/07 06:23 AM
Rising oil prices, weak housing data, and ongoing credit concerns pushed mortgage rates lower last week as investors sought safety for their dollars. Stock markets took losses and bond markets -- including mortgage bonds -- booked gains. Remember, when mortgage bonds go up in price, mortgage rates come down. To understand why mortgage rates tend to drop when stock markets have a sell-off, we should look at the situation from an investor's perspective.
When lots of investors are selling stock positions, stock markets fall. The investors get cash in return for their sold securities. But cash doesn't offer much of … (2 comments)
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interest rates: Jumbo Mortgage Rates Shed Some of Their Risk, Rates Fall - 10/10/07 11:41 AM
As a sign that some normalcy is returning to mortgage markets, the premium attached to jumbo mortgage rates is getting smaller.
A "jumbo"-sized loan is one that exceeds $417,000 on a single-family residence, among other criteria.
Conforming 30-year fixed rate mortgages and jumbo 30-year fixed rate mortgages tend to move in the same direction over time. You can see that illustrated on the left-side of the graph.
But, as we move towards the right, we can see how, beginning in mid-August of this year, the general direction of mortgage rates for these two products diverged.
In mid-August, you'll remember, is … (11 comments)
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interest rates: How Today's Employment Data is Hurting Mortgage Rates - 10/05/07 09:32 AM
On the first Friday of each month, the Bureau of Labor Statistics releases its employment report for the United States.
Last month, the jobs report showed that the economy actually lost jobs for the first time since 2003. The total loss of jobs equaled 4,000 and contributed to the Federal Reserve's decision to lower the Fed Funds Rate for the first time since that same year.
Of course, today is the first Friday, so a new employment report hit the wires earlier this morning. The news was good for the economy, but not so good for people in the market … (6 comments)
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interest rates: The Week In Review (September 24, 2007) : What To Watch For - 09/24/07 04:18 PM
In a semi-surprise move last week, the Federal Reserve lowered the Fed Funds Rate by 0.500%.
The Fed wants to prevent a dramatic economic slowdown that started in the housing sector and appears to be spilling over into other sectors now, too.
According to some pundits, the half-point FFR drop was exactly what the markets needed -- it restored confidence and promoted liquidity.
According to others, though, the Fed bailed out risk-takers and may have re-ignited the flames of inflation.
It's hard to tell which side is correct, so we'll have to believe that both sides have valid points worth considering.
And, like … (2 comments)
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interest rates: Want More Proof that the Fed Doesn't Control Mortgage Rates? - 09/21/07 09:08 AM
For more proof that the Fed does not control mortgage rates, consider this:
In the immediate aftermath of the Fed's decision to lower the Fed Funds Rate by 0.50%, mortgage rates improved by about 0.25% on average.
But, in the two days since, mortgage rates have not only given back those gains, but have climbed to their highest levels of the month.
This is because post-rate cut, the U.S. dollar is trading at all-time lows against the Euro and other currencies. Therefore, buyers of dollar-denominated securities such as mortgage bonds are getting less return for their investment.
When an investment loses … (8 comments)
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interest rates: How Prime Rate Relates to the Fed Funds Rate - 09/20/07 09:07 AM
Prime Rate is currently 7.750%.
Prime Rate is the "shorthand" name for the Wall Street Journal Prime Rate, a variable interest rate that is used in pricing many types of consumer loans.
These loans include:
Home equity lines of creditCredit card loansAuto loans Prime Rate's variable nature is tied to the Fed Funds Rate. Prime Rate moves in tandem with the FFR and is always three percentage points higher.
So, after the FFR's 0.500% drop Tuesday, consumer loans tied to Prime Rate dropped by 0.500%, too.
Prime Rate was 4.000% in June 2004 before the Federal Reserve started a string of … (7 comments)
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interest rates: Making English out of Fed-Speak (September) - 09/19/07 09:11 AM
The Fed lowered the Fed Funds Rate by 0.50% yesterday. A rate decrease was expected by most market participants, but the 50 basis points movement seemed to catch some players off-guard.
Mortgage rates dipped in the wake of the announcement, but the real winners are homeowners with balances on their home equity lines of credit and holders of credit card debt.
Each saw their respective borrowing rates drop 0.50% yesterday because the interest rates for HELOCs and credit cards are based on Prime Rate.
Prime Rate moves in lock-step with the Fed Funds Rate.
In the statement above -- as explained … (0 comments)
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interest rates: How the Fed Will Disappoint No Matter WHAT it Does Today - 09/18/07 08:54 AM
It's all eyes on the Fed today; the market anxiously awaits the central bank's 2:15 P.M. ET press release.
Some of the market bias towards a 0.50% rate cut has decreased in favor of a 0.25% cut. This shift is largely psychological.
Markets are trying to "get inside the head" of Fed chief Ben Bernanke, speculating about how he will react in the first Federal Open Market Committee meeting since the credit crunch reached a head in mid-August.
The speculation and guessing tells us that there is tremendous uncertainty about how the FOMC will vote today.
Uncertainty in markets … (3 comments)
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interest rates: The Week in Review (September 17, 2007) : What to Watch For - 09/17/07 09:17 AM
The volatile path of mortgage rates last week followed the changing expectations for Tuesday's Federal Open Market Committee meeting.
The FOMC sets the Fed Funds Rate, a benchmark interest rate upon which Prime Rate is based.
According to Federal Funds Rate futures, there is a 94 percent chance that the Fed will lower the FFR by at least 25 basis points Tuesday. The same analysis shows a 50% chance for a 50 basis points cut.
One basis point is equal to 0.01%.
The wayward path of mortgage bonds last week reflects varying opinions about tomorrow's Federal Reserve press release and … (4 comments)
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interest rates: What Would it Take for YOU to Feel the Pinch of Higher Gas Prices? - 09/14/07 08:48 AM
As crude oil crossed $80 a barrel Thursday, the Wall Street Journal ran an interactive poll with its readers.
What sustained price for gasoline would cause you to cut back on other household spending?
The graph above shows the on-going results of the non-scientific study. You can chime in, too, at http://forums.wsj.com/viewtopic.php?t=805.
As consumers cut back spending, the economy slows down which generally leads to lower mortgage rates and weaker housing markets as a result of job losses. According to GasBuddy.com, some areas of San Francisco are already topping $3.50/gallon.
… (10 comments)
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interest rates: What the Price of Gold Says about the Economy - 09/13/07 09:33 AM
Headlines today read that the value of gold is nearing its all-time high (adjusted for inflation). The lay people would ignore this story, but those in the know understand that the price of gold is usually reflective of the state of the global economy.
The spot price of gold tells a lot about investor psyche and it is up nearly 10 percent from its 30-day low.
As a "safe haven" investment, gold's value tends to increase when an economic recession is expected. That's because gold tends to hold its value during a recession; its value is tied to the global economy … (0 comments)
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interest rates: Why Mortgage Rates Fell BEFORE the September 18 Fed Meeting - 09/12/07 06:02 PM
Mortgage rates "come from" one place only: the prices of mortgage bonds as determined by investors.
The higher the price, the lower the corresponding return, or rate.
Bonds -- like stocks -- are traded as securities. An investor may buy Microsoft stock if he thought the company's future looked bright, and he may buy mortgage bonds if he expected favorable bond market conditions ahead.
In a declining economy, bonds can be an especially attractive investment because they offer a fixed rate of return to an investor. As more buyers line up to buy, of course, the price of bonds goes … (8 comments)
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interest rates: The Week In Review (September 10, 2007) : What To Watch For - 09/10/07 09:30 AM
Weak employment data pushed mortgage rates lower last week. Against expectations of 110,000 new jobs created in August, last Friday's Non-Farm Payrolls report showed a loss of 4,000 jobs.
The story made headlines all over the country this weekend but its connection to mortgage rates is not always clear. Here's how the jobs report relates to mortgage rates:
1. An employed person earns an income2. An employed person spends money on goods and services
When more people are employed, more U.S. dollars are circulated inside the U.S. economy. It's widely believed that two-thirds of the economy is the result of consumer spending, … (2 comments)
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interest rates: How Today's Jobs Report Impacts Mortgage Rates - 09/07/07 10:15 AM
This morning, the government reported that the U.S. economy lost 4,000 jobs in August. Led by losses in manufacturing and construction, this is the first time since 2003 that the economy has failed to add jobs in any given month.
Markets had been expecting a job gain of roughly 110,000, but many players on Wall Street had been placing their bets to the weak side of that figure.
Very few (if any) expected a number this weak, however.
The implication of a weak jobs report is that many now believe that the Fed has an economic reason to lower the … (4 comments)
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Ilyce N. Powell, CMPS™ - Certified Mortgage Planning Specialist
Baltimore,
MD
More about me…
AmeriSave Mortgage Corp./ United First Financial
Address: Lending in All 50 States + DC, Eliminating Debt and Building Wealth in United States and Canada
Office Phone: (866) 814-2153 x 7103
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