FHA Interest Rate Predictions: Week of April 26, 2010

Filed under Weekly Review by on April 26, 2010 at 7:47 am {no comments}

Mortgage markets worsened last week in see-saw trading. By the time Friday’s market closed,  had moved higher.

The biggest stories of last week were actually non-stories.

First, the ash cloud from Iceland’s Eyjafjallajökull volcano dissipated, allowing warehouses to move inventory, airlines to move people, and businesses to move product.  In addition, Greece moved closer to securing emergency funding that will help it stave off default.

When these two issues were threats earlier in the month, mortgage bonds rallied on buying, driving rates down. As the threats lessened over the course of last week, however, mortgage bonds sold off and rose.

By contrast, this week features lots of stories. Economic data will be at the forefront, as will the Federal Reserve which meets for one of its 8 scheduled meetings of the year.

  • Monday : Greece is expected to announce an aid package
  • Tuesday : reports on home values from February
  • Wednesday : Fed adjourns from its 2-day meeting
  • Thursday : Initial Unemployment Claims are released
  • Friday : GDP and numbers are released

Furthermore, Wall Street will have its eye on the Senate’s questioning of key employees in the wake of the SEC’s fraud charge.

In general, news that’s “good” for the U.S. economy will be bad for mortgage rates, and vice verse.  And with mortgage rates changing as quickly as they have been, rates could really rise in a hurry.

The best defense against rising mortgage rates is to execute a rate lock. If you’re nervous about rates moving higher, call your loan officer and execute your rate lock today.

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FHA Interest Rate Predictions: Week of April 19, 2010

Filed under Weekly Review by 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.

Safe haven 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 safe haven 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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