What’s Ahead For Mortgage Rates: Week of March 23, 2009

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Posted on in Mortgage Rates

What’s Ahead For Mortgage Rates: Week of March 23, 2009

Mortgage markets scored big gains last week, sparked by the Federal Reserve’s pledge to buy $750 billion more mortgage-backed bonds in 2009.  Conforming mortgage rates fell on the week, overall. But Federal Reserve intervention wasn’t the only good news for rate shoppers last week.  New evidence showed — for the time being, at least — that the U.S. economy may be reversing direction: Homebuilders are breaking ground on new homes again First-time jobless claims are falling Inflation is present and, therefore, deflation is not Should the economy continue trend stronger through the summer, it will likely fuel stock market gains, drawing cash away from mortgage bonds.  This would lead mortgage rates higher — perhaps for good.  Today’s levels are artificially low, after all, supported by government intervention more than economic fundamentals. After the Fed’s Wednesday afternoon announcement, rates fell to all-time lows before recovering sharply into the weekend on economic optimism and fears of inflation. This week, the trend higher may continue.  In addition […]

by jberman
Posted on in Mortgage Rates

Explaining What The Federal Reserve Did In Plain English (March 18, 2009 Edition)

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today, within the target range of 0.000-0.250 percent.  This doesn’t mean the Fed stood pat, however. On plan to resurrect the economy using “all available tools”, today, the Fed announced a new, $1.5 trillion round of fiscal support for the treasury and mortgage markets. The stimulus will likely be Thursday morning’s headline story. In its press release, the FOMC touched upon a few of the prevailing economic issues, using these points as a legitimizing backdrop for its newest debt load: Job losses and wealth loss are dragging down consumer spending Some U.S. trading partners are falling into recession Businesses are cutting back on investment and inventory Of interest is that the FOMC said today’s inflation levels may be too low to support economic growth at all.  This condition is more commonly called deflation.  The Fed’s latest actions, therefore, may be a deliberate attempt to induce inflation through […]

by jberman
Posted on in Housing Market

Have Home Prices Already Bottomed? New Housing Permits…

There’s a mixed message in February’s Housing Starts data and it may be a good sign for home sellers in the near-term. As reported by the government, new home construction rose by 22 percent last month.  The press is running with the headline number, calling it evidence of a market bottom. A more thorough inspection, however, reveals a different story. The 22 percent figure applies to all homes built — including apartment building units.  Isolating residential units, February’s housing starts rose by just 1 percent.  Furthermore, the data’s margin of error is 11 percent. Statistically, we can’t know if residential housing starts really rose last month, or if it fell instead.  What we do know, though, is that the number of building permit requests rose. Permits to build single-family homes were up 11 percent in February nationwide. To home sellers, the rise in building permits may confirm that a housing market turnaround is already underway.  Builders wouldn’t be putting new inventory on the […]

by jberman
Posted on in Mortgage Rates

The Federal Reserve Is Meeting And What It Means To Your Mortgage Rate

The Federal Open Market Committee begins a scheduled, 2-day meeting today to discuss the country’s monetary policy.  As is custom, the group will issue a press release to the markets upon adjournment. There are 8 scheduled FOMC get-togethers annually and the post-meeting press releases are among the most powerful market-moving events of the year. It’s not the Fed’s actual policy changes that causes fortunes to be won or lost, though. These changes can predicted and traded — and, therefore, hedged — on Wall Street using Fed Funds Rate Futures.  For example, Wall Street predicts with 97% certainty that the Federal Reserve will not make a policy change at this time. As opposed to than policy change, it’s the verbiage of the FOMC’s press release that can really move markets.  This is because the press release is a clear-eyed look into what the Federal Reserve thinks of the United States economy — its strengths, its weaknesses, and its threats. After its January 2009 […]

by jberman
Posted on in Mortgage Rates

What’s Ahead For Mortgage Rates This Week : March 16, 2009

Mortgage markets lost a little bit of ground last week, edging mortgage rates higher in a week marked by the largest stock market gains since November. Once again, mortgage rates couldn’t sustain a rally of more than 5 days.  Not since late-2008 have mortgage rates managed to fall two weeks in a row. Last week’s market was impacted by three distinct factors: Bank balance sheets weren’t as bad as feared Discussion started on new bank valuation methods Traders got optimistic that “the worst is over” The rally will likely continue into this week, too.  This after the 60 Minutes interview with Ben Bernanke in which the Fed Chief said he won’t let big banks fail and that the recovery will likely begin later this year. It’s the first interview with a sitting Federal Reserve Chairman in history. Coincidentally, the Federal Reserve will be in the spotlight this week as it concludes a two-day meeting Wednesday after which the Fed will issue its […]

by jberman
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