Mortgage Rates Little Changed on Week
The past week experienced little change in mortgage rates. Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.06 percent with an average 0.5 point for the week ending May 1, 2008, up from last week when it averaged 6.03 percent. Last year at this time, the 30-year FRM averaged 6.16 percent.
The Fed cut the short term fed funds rate by .25 basis points to 2.0%, which had little impact on the overall refinance rates. The biggest risk to rising mortgage rates continues to be inflation and the housing market. The Fed did note that financial markets remain under considerable stress and tight credit conditions, which along with the deepening housing contraction, are likely to weigh on economic growth. The Fed lest the impression that we may be at the end of rate cuts for this cycle. The Fed's statement acknowledged some indicators of inflation expectations have picked up, yet it stuck with its view that it expects inflation to moderate in coming quarters.
April employment numbers came out better than expected causing the stock market to rally. The 10 year treasury yield bounced down and back up by week's end increasing by .010% for the week, which reflects the small change in mortgage rates.
Housing numbers continue to slump. This week's pending home sales report for March will likely follow the slumbering home sales trend.
Overall, the week was quiet, considering the fed meeting, GDP report, and slew of inflation and earnings data reported. This could be a good sign, especially for the prospect that the inflation outlook might not be as bad as originally anticipated. With the Fed curbing future cuts, the dollar can recover and have a positive impact on our food and energy costs, further stabilizing the economy.
Mortgage rates are still at excellent levels, but will only remain there if investors start putting their money back to work in mortgage backed securities (The 10 Year treasury yields won't stay at these levels forever). Banks and investors have been so busy building up cash reserves, they still remain hesitant to dip their green toes in the mortgage market. The industry change to stricter mortgage underwriting guidelines should help, but I think they are waiting for sustained and stable inflation, a stable housing market and to follow the first guy who jumps back into mortgage backed securities headfirst. Fannie and Freddie could be the heros to ride in on the white horse.
May the Rates be with You!
Refinance Tool Box
The Fed cut the short term fed funds rate by .25 basis points to 2.0%, which had little impact on the overall refinance rates. The biggest risk to rising mortgage rates continues to be inflation and the housing market. The Fed did note that financial markets remain under considerable stress and tight credit conditions, which along with the deepening housing contraction, are likely to weigh on economic growth. The Fed lest the impression that we may be at the end of rate cuts for this cycle. The Fed's statement acknowledged some indicators of inflation expectations have picked up, yet it stuck with its view that it expects inflation to moderate in coming quarters.
April employment numbers came out better than expected causing the stock market to rally. The 10 year treasury yield bounced down and back up by week's end increasing by .010% for the week, which reflects the small change in mortgage rates.
Housing numbers continue to slump. This week's pending home sales report for March will likely follow the slumbering home sales trend.
Overall, the week was quiet, considering the fed meeting, GDP report, and slew of inflation and earnings data reported. This could be a good sign, especially for the prospect that the inflation outlook might not be as bad as originally anticipated. With the Fed curbing future cuts, the dollar can recover and have a positive impact on our food and energy costs, further stabilizing the economy.
Mortgage rates are still at excellent levels, but will only remain there if investors start putting their money back to work in mortgage backed securities (The 10 Year treasury yields won't stay at these levels forever). Banks and investors have been so busy building up cash reserves, they still remain hesitant to dip their green toes in the mortgage market. The industry change to stricter mortgage underwriting guidelines should help, but I think they are waiting for sustained and stable inflation, a stable housing market and to follow the first guy who jumps back into mortgage backed securities headfirst. Fannie and Freddie could be the heros to ride in on the white horse.
May the Rates be with You!
Refinance Tool Box
posted by Jim Bisnett at
1:33 PM
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