Monday, August 26, 2013

Rates tripped up?

Mortgage rates fell between Monday and Friday of last week. However, if you only saw mortgage rates as reported by Freddie Mac's weekly Primary Mortgage Market Survey (PMMS), you'd think rates did the reverse.
Freddie Mac's survey of 125 banks conducted during the early part of the week showed the average 30-year fixed rate mortgage rate rising 0.18 percentage points to 4.58% last week, the highest reading for the 30-year fixed in more than 100 weeks of surveys.
The 15-year fixed rate showed a slightly smaller jump, moving to 3.60%, widening the historically huge gap between the two rates.
Meanwhile, the difference between Freddie Mac's Primary Mortgage Market Survey and the market's actual movement throughout the calendar week highlights just how quickly mortgage rates are moving. Freddie Mac's survey missed all of Friday's market gains.
Since May of this year, Wall Street has shown concern for the future of QE3. QE3 is the Federal Reserve's long-standing mortgage market stimulus plan via which the central banker purchases $40 billion of U.S.-issued mortgage-backed securities (MBS) monthly.
These purchases help to hold bond prices high and bond prices and U.S. mortgage rates move in opposite directions. In this way, QE3 has helped to suppress mortgage rates on everything from conforming and VA loans to FHA and USDA product.
Because the U.S. economy is growing, though, the Federal Reserve has said it may soon "taper" QE3 down to zero. There's disagreement within the Fed, though, about when this taper should begin.
It's among the reasons why mortgage rates have been volatile.
Some Fed members believe QE3 should end later this year. Some believe it should stretch into 2014 and beyond. The debate is affecting mortgage rates for buyers and refinancing households to taper QE3 would mean to reduce demand for U.S. mortgage bonds, which lowers the value of MBS holdings.
Wall Street wants to get ahead of that trade -- but not too far ahead to miss near-term gains.  Wall Street is unsure whether it should be betting with QE3 or against QE3.
Each sign of economic strength appears to lift mortgage rates higher. Each sign of weakness drops them lower. This is exactly how MBS markets are supposed to behave. However, because of QE3 and its sheer size, the stakes are much bigger.
Mortgage rates are carving out wide ranges daily -- three times the normal speed.

Why Mortgage Rates Might Fall This Week

It's hard to shop for today's lowest rates when rates are always changing. This week, with a fair amount of economic data due for release, rates are expected to move on data. This can be easier on shoppers than when rates move on market sentiment.
Here's a review of this week's most important economic events. In general, any event which "beats" a Wall Street estimate will result in mortgage rates moving higher. Events which fall short will result in mortgage rates moving down.
  • Monday : Durable Goods; Dallas Fed Manufacturing Survey
  • Tuesday : Case-Shiller Index; Consumer Confidence; Richmond Fed Manufacturing Index
  • Wednesday : Pending Home Sales Index
  • Thursday : Jobless Claims; Q2 GDP; 
  • Friday : Chicago PMI; Personal Income & Outlays; Consumer Sentiment
In addition, there are a handful of Fed speakers scheduled for this week including San Francisco Federal Reserve Bank President John Williams (Tuesday); Richmond Federal Reserve Bank President Jeffrey Lacker (Thursday); St Louis Federal Reserve Bank President James Bullard (Thursday); and Bullard again on Friday.
Each Fed speaker has an opportunity to shift rates -- just listen for the talk of QE3.

Take A Gut-Check On Mortgage Rates

As compared to last year, mortgage rates have moved higher. However, for today's U.S. home buyers, rates remain attractive. The same is true for the millions of still-eligible HARP 2.0 homeowners nationwide.
See how today's fast-moving mortgage rates fit your household budget. Get started with a rate quote today. It's fast, it's free and there's no obligation or cost.

To receive personalized rates please email me at with your available times to discuss your options.