Mortgage markets were unchanged last week, despite improving on four of five days. Economic data was worse-than-expected almost across the board, but neither FHA nor conforming mortgage rates in South Carolina budged.
Instead, markets grappled with the just-released Fed Minutes which weighed heavily on investors and on Wall Street.With the release of the minutes, it’s increasingly clear that the Federal Reserve will end its support for bond markets on schedule in June, and that a Fed Fund Rate hike is possible within the next 12 months.
Not surprisingly, the date of the Fed Minutes release — Wednesday — was the singular “down day” for mortgage markets last week.
After falling for 4 straight weeks, Simpsonville mortgage rates appear to have troughed. This week they could rise, and there’s no shortage of data on which for bonds for trade.
- Tuesday : New Home Sales; Speeches from Fed’s Plosser and Bullard
- Wednesday : Durable Goods; FHFA Home Price Index
- Thursday : GDP; Initial Jobless Claims
- Friday : Core PCE; Pending Home Sales; Consumer Sentiment
There’s other forces on markets, too. First, there are 3 bond auctions — a 2-year, a 5-year, and a 7-year. Weak demand for any of the three will lead mortgage rates higher.
And, second, this is a holiday week. Memorial Day is next Monday and, with the 3-day weekend ahead, expect large numbers of Wall Streeters to skip out on Friday (and likely part of Thursday, too). As the week concludes, therefore, bond volume will thin, amplifying mortgage rate movement — up or down.
If you’re shopping for a mortgage, it’s a good time to look at locking in. As the week progresses, mortgage rates should become less predictable and more volatile.
Mortgage markets worsened overall last week for the first time in 5 weeks.
Better-than-anticipated economic data plus dwindling concerns for Greece’s sovereign debt combined to a spark a bond sell-off. Conforming mortgage rates moved higher in South Carolina as a result.
Rate shoppers were hit especially hard last Tuesday.
At Monday’s close, conventional fixed- and adjustable-rate mortgages were posting their lowest levels of 2011, but by Tuesday’s market close, rates had climbed as much as 0.250 percent across the board. In some cases, more.
The spike highlights how quickly mortgage rates can change in a recovering economy, and why “floating” a rate can be costly.
This week, mortgage rates figure to be equally volatile. There’s a large set of market-changing data planned for release, and several Fed members have planned public appearances, including a 9:00 AM ET, Monday morning kickoff from Fed Chairman Bernanke.
- Monday : Bernanke speech; Homebuilder Confidence Survey
- Tuesday : Housing Starts; Building Permits
- Wednesday : FOMC Minutes
- Thursday : Existing Home Sales
In addition, Thursday brings a second rate shopper-risk.
The Initial Jobless Claims will be released at 8:30 AM ET and it will be closely watched by Wall Street. Initial claims are sharply higher since the end of April and investors believe the jobs market is key in a sustained economic recovery. If the data shows that initial claims receded, mortgage rates are expected to rise in response
Mortgage rates improved last week on a bevy of economic and geopolitical news. Conforming mortgage rates in Simpsonville improved, falling to their lowest levels of 2011.
It’s a welcome development for home buyers and rate shoppers nationwide. Mortgage rates were expected to rise throughout most of this year.
There were four big stories that contributed to falling rates last week.
The first was the news that Osama bin Laden was killed. The news was announced over the weekend, and by the time markets opened Monday morning, the price of oil was already falling. Falling oil prices reduce inflationary pressures on the economy and because inflation contributes to rising mortgage rates, the absence of inflation helps them to fall.
This news carried markets to Thursday morning. That’s when the Department of Labor announced that Initial Jobless Claims had suddenly and unexpectedly surged to an 8-month high. Last week’s report featured the biggest one-week jump in claims in more than 2 years.
This, too, pushed mortgage rates lower, casting doubt on the strength of the U.S. economic recovery.
Then, Friday morning, those doubts were cast aside. When the government released its Non-Farm Payrolls report for April, it showed job creation topping 200,000 for the third straight month. We would have expected mortgage rates to rise on news like this, but they didn’t.
Rates fell instead — mostly because the strength of the U.S. jobs report rendered mortgage-backed bonds more attractive to global investors.
The last story, though, is the one worth watching long-term.
Late-Friday, in response to its growing debt issues, it was reported that Greece may withdraw from the Eurozone. An outcome such as this is unlikely, however, the possibility was enough to spark a flight-to-quality that benefited U.S. mortgage rates. Conforming and FHA rates ended Friday lower, reaching their best levels since December.
This week, there isn’t much economic news set for release so the above stories will continue to influence markets and rates. Geopolitics can change quickly, though, so if you’re floating a mortgage rate and waiting for the bottom, don’t wait too long. Markets can reverse in a snap.
If you see a rate you like, the safest move is to lock it.