Interest Rates: Since the Fed lowered the Fed Funds rate ½% last month we have had mortgage rates climb about ½%. About half of that move up was from Friday’s employment report that surprised the market with mostly good news on the employment front. If you have ever read any of my letters you should know that Good News is Bad news for interest rates. There is a bit of a bright side to this. A few Fed Governors have come out and said they still see a need to lower rates and some have even said they are not confident the employment report is accurate, more of a blip on the radar. Additionally, there is some historic precedence. If you look at the 10yr Treasury has almost always gone up about 3/8ths of 1 percent after the first cut in a cycle. As of today, we are up 0.36% on the 10yr since the recent low. The next piece is the important one. On average the 10yr has dropped 37% in the months following the beginning of an easing period. Doing the math on that for you- before the Fed move in September the 10 yr was at 3.7% (now currently 4.0628%), if history repeats, we should see the 10yr fall 1.35% to 2.35%. We should see a similar move in 30yr mortgage rates. The short version of this is Mortgage rates are likely to drop another 1%+ from their lows we saw mid-September, likely putting us into the 5s in the near future. This week’s CPI and PPI numbers along with the end of the Month PCE report will all be closely watched to see where inflation is -each has a strong chance of moving rates hopefully back in the downward direction
Here is a chart of the initial cuts in a Fed Easing cycle and the results mentioned above:
A side note to Interest Rates: With interest rates moving rapidly much of the news you see from NAR, the Mortgage Banking association (MBA) and even FreddieMac all are reporting rates that are much lower than today’s actual market rates. These numbers are always a week old by time they are reported, they also typically have at least 1 point in the number and leave out the loan level price adjustments. Not only is it old news, it is not necessarily what the public will see for their individual scenarios.
If you are looking to purchase or refinance a home in NJ, please give me a call, I can also help you in all 50 states, CMG is licensed throughout the country.
Robert Rauf
Mortgage Loan Originator NMLS# 248937
http://www.RobertRauf.com
or my blog: http://activerain.com/blogs/rrauf
Office: (732)908-4868 Cell (732)740-0175
RRauf@CMGhomeloans.com
www.RobertRauf.com
Since 1987 I have been helping my clients fulfill their dream of home ownership! CMG Home Loans is located at 222 Commons Way Toms River, NJ 08755. NMLS #1820. Visit www.RobertRauf.com for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood 08722 Bayville 08721,
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