Rate Confusion
Sorry for not blogging since early December. As the holiday approaches, I have been trying to push through mortgage applications before people start taking days off from work. Meanwhile, many things have happened that will affect mortgage interest rates. I personally find everything to be quite confusing because we are getting different economic signals.
On 12/4 the November unemployment data came in very bullish: it has fallen back to 10% and job losses have shrunk to the lowest level in nearly two years. Not surprisingly, the FNMA 30-year bond, which is inversely proportional to mortgage interest rate (one drops and the other rises), dropped on the news (see blue circle below). It dropped even further before the fed meeting this past week. This is not good for mortgage interest rates.
After the fed meeting on 12/16, although the interest rate was left unchanged, the fed statement pointed to a more optimistic view of economy recovery. Many are looking past fed’s decision of leaving the interest rate unchanged and looking toward possible higher interest rate in the future.
Do all these developments mean that the mortgage interest rate may rise soon? Probably!
The confusion comes in this morning (12/17) when “the initial claims for jobless benefits rose 7,000 to a seasonally adjusted 480,000 in the week ended Dec. 12. Economists had expected claims would fall by 9,000.” This has caused the FNMA 30-year bond to rise this morning (see red circle below). Of course, the weekly data is not as important as the monthly, but it does cause confusion as to the future fate of mortgage interest rate.
The screen shot that I have inserted below is taken from a proprietary program that we use to track the changes in mortgage rates. This allows us to inform our clients when their target interest rate is reached so that they can lock in the rate.
If you would like for us to analyze whether refinance is right for you at this point, give us a call at 1-888-484-3783 and we will send you analytic reports that will help you make informed decisions.
