FHA Interest Rate Predictions: Week of April 19, 2010

Filed under Weekly Review by Chris Richter on April 19, 2010 at 7:47 am no comments

The FHA loan rate approached its best levels since March on last week’s rally.

That marks two weeks in a row with considerable improvement and two weeks in a row where rates dropped due to “” buying.

buying, which we’ve been covering a lot, is when investors sense market risk and move their money towards less risky investments.  Since and mortgage bonds are backed by the U.S. government, they are inherently less risky investments.

When uncertainty prevails in the markets, foreign or domestic, a outcome is that the will dip lower.  Last week had uncertainty, both foreign and domestic.

Early in the week, virtually all air travel in and out of Europe was grounded as Iceland’s volcanoes spewed ash into the air.   Since plane engines don’t fare that well when covered in ash, it grounded planes.  Planes aren’t just for vacations.  Goods, especially perishables, are stuck in warehouses around the globe unable to reach a market.

Domestically, we had “a little bit” of news as well.  Friday, the SEC announced fraud charges against Goldman Sachs.  This sent Wall Street into a tailspin on Friday and the move from stocks to bonds pushed rates lower again.

This Week’s FHA

We have a very light economic calendar this week and the news doesn’t look to be the biggest element moving rates.  On tap for Thursday we have:

  1. Initial Jobless Claims : Important vis-a-vis broader employment figures. A strong number could push rates up.
  2. Existing Home Sales : Housing remains a key part of the economy. Strong sales are expected because of the tax credit.
  3. Producer Price Index : A “Cost of Living” index of business. A weak reading is expected because inflation is low.

The bigger risk to the FHA loan rate this week is a reversal of this trend of buying.  It is what has pushed rates down over the past 10-day rally.  When it reverses, so too will .

If you’re evaluating a lock or float decision, rates have significantly more room to go higher rather than lower.

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FHA Interest Rate Predictions | Week of March 29

Filed under Weekly Review by Chris Richter on March 29, 2010 at 7:47 am no comments

Mortgage markets tanked last week and the FHA interest rate saw its highest levels in a month.  Wednesday was the bad day and saw the worst sell-off in over six months.

The major concerns are tied to the current mess in the EU and worries of how our federal debt will impact rates.  The best time to lock a conventional or last week was Tuesday morning.

Predictions for FHA This Week

This week, markets should remain volatile. There’s a large set of economic data due for release, plus trading volume will thin as the week goes on because markets are closed Friday for Good Friday.

Coincidentally, Friday is also the day that the March jobs report is released.  Growth is forecasted for this report, a net gain of 187,000 in March.  This is a large number as compared to last month’s net loss of 36,000 job. However, analysts are already dismissing March’s numbers as skewed by both the bad storms of February, and the temporary hiring of Census workers.

In most months, major job growth would be bad for .  This month, that won’t be the case. It will take a figure north of 200,000 to cause rates to rise and the higher the actual number, the more that rates will respond.

Also this week, on Wednesday, the Federal Reserve’s $1.25 trillion program to support mortgage markets sunsets. Fed insiders estimate that the program dropped rates 1 percent since its inception in 2008. It’s reasonable that FHA will rise after its end.

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