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What’s Ahead For Mortgage Rates This Week : August 27, 2012

August 27, 2012 by Jeff Cost

Greece bailout plans revisited Mortgage markets improved last week. Mixed data highlighted the U.S. economy’s slow, steady expansion; the Federal Reserve changed market expectations for the new stimulus; and, sovereign debt concerns moved back to the forefront in Europe.

Conforming mortgage rates fell last week for the first time this month, breaking a 4-week losing streak that had stymied would-be refinancing households in OH and nationwide.

Mortgage rates had been higher since the start of August.

In published minutes from its July 31-August 1, 2012 Federal Open Market Committee meeting, the Federal Reserve revealed that, absent “substantial and sustainable” economic growth, many of its members believe further monetary easing would be warranted.

Recent data shows that growth may be sustainable, but it’s hardly substantial.

Job growth is higher in 22 straight months, but averaging less than 100,000 net new jobs per month over the past three months
Housing data shows a steady home sales growth, but a dwindling home inventory of new homes and home resales
GDP grew 1.5% in Q2 2012, down from 2 percent during the first three months of the year

Should the Fed add new stimulus, it would likely come in the form of a third round of quantitative easing, a program by which the Federal Reserve purchases government-backed bonds on the open market, including mortgage-backed bonds.

The new-found demand for bonds helps raise their respective prices which, in turn, moves down their respective yields.

“QE3” would push mortgage rates lower, likely. It’s not expected to be released (if at all) until the FOMC’s next scheduled meeting, September 12-13, 2012. There is a small chance it’s announced this Friday, however; the Federal Reserve is meeting in Jackson Hole, Wyoming for its annual retreat.

For this week’s rate shoppers, this week is filled with data and rhetoric. New U.S. housing data will be released along with recent inflation statistics. Both have the ability to cause mortgage rates to rise. In addition, second quarter GDP figures will be revisited and revised. If they’re revised lower, Fed-led stimulus may be more likely.

Lastly, Eurozone leaders reconvene to discuss the terms of Greece’s bailout. If terms are changed for the worse for Greece, mortgage rates may drop in a bout of safe-haven buying.

Mortgage Rates Dropping After Release Of Fed Minutes

August 24, 2012 by Jeff Cost

Fed minutes August 2012 Eariler this week, the Federal Reserve released the minutes from its 2-day meeting which ended August 1, 2012. Since the release, mortgage rates have dropped.

The Fed Minutes are released on a schedule, three weeks after the FOMC adjourns from one of its 8 scheduled meetings of the year.

The Fed Minutes are meeting minutes; like you’d see after a corporation shareholder meeting, or after a condo board meeting. Specifically, the Fed Minutes details the conversations among Federal Reserve members which shape our nation’s economic policy.

The most recent Fed Minutes show a central bank closer to adding new market stimulus that previously believed.

At its last meeting, the Federal Reserve’s debate focused on the rate of economic growth and whether it was occurring too slowly to be long-lasting. The Fed appears to think so. Without a “substantial and sustainable strengthening” in the pace of economic expansion, it said, additional monetary stimulus would be “warranted fairly soon”.

Other notes from within the Fed Minutes included :

On employment : Unemployment rates will “decline only slowly”
On housing : The market appears “to have improved, somewhat”
On inflation : Retail energy costs are keeping consumer prices low

However, the Fed expressed an “unusually high level of uncertainty” about its assessments owing to the ongoing European sovereign debt problems. “Spillovers” remain possible and default threats continue to weigh on markets.

The Federal Reserve’s next scheduled meeting is September 12-13, 2012.

Since the minutes were released — and for the first time this month — mortgage rates in Kentucky made a big move lower. This is in contrast to the rest of August through which mortgage rates have climbed steadily.

According to Freddie Mac, on August 1, the average 30-year fixed rate mortgage rate was 3.49% nationwide. Today, the rate is 3.66%. Between now and the Fed’s next policy-making meeting September 13, though, mortgage rates are subject to change. If today’s mortgage rates fit your budget, consider locking in.

Existing Home Sales Rise To 4.47 Million

August 23, 2012 by Jeff Cost

Existing Home Sales Home resales climbed 2% last month as the housing market continues its measured, steady recovery.

According to the National Association of REALTORS®, Existing Home Sales rose to 4.47 million units in July on a seasonally-adjusted, annualized basis.

An “existing home” is a home that cannot be classified as new construction and, despite a reduction in the national homes inventory, the number of previously-occupied homes sold in July was higher by 10% as compared to one year ago.

The Existing Home Sales also reported the folliowing :

First-time buyers accounted for 34% of all purchasers, down from 34% in June
Real estate investors accounted for 16% of all purchasers, down from 19% in June
Cash buyers accounted for 27% of all purchasers, down from 29% in June

In addition, the real estate trafde group reports that distressed sales accounted for a smaller percentage of the overall home resale market in July. Just 24% of home resales were for homes in various forms of foreclosure or short sale.

This is down one percent from June, and five percent from July 2011.

It also marks the smallest percentage of homes sold in “distressed” status since the trade group began to track such data 4 years ago.

Lastly, nationwide, the supply of homes for sale dropped to 6.5 months. At the current pace of sales, therefore, the complete U.S. home resale inventory would be sold by the end of Q1 2013.

There are now 2.40 million homes for sale — a 24% reduction from July 2011.

For today’s Columbus home buyers, the July Existing Home Sales report reinforces the notion that housing is in recovery and what the nation’s home builders have been saying since late-2011 — the next six months for housing will likely be strong. Growth may not be linear, but it figures to be consistent.

With home inventory low and mortgage rates the same, the home resale market looks ripe for good deals.

What’s Ahead For Mortgage Rates This Week : August 27, 2012

Mortgage Rates Dropping After Release Of Fed Minutes

Existing Home Sales Rise To 4.47 Million

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