Mortgage Rates Recap June 28, 2008
What a week for the economy, with a slew of major economic reports delivered in addition to the Fed Policy Statement. This is not to mention the continued spike in crude oil prices. The stock market took on heavy losses, resulting in an investor flight to bonds, creating a dip in mortgages rates as yields dropped. Personal spending rose 0.8 percent in May as taxpayers began to receive their tax rebate checks. The reading was above projections, and signaled that consumers are still managing to spend despite higher food and energy prices. This put treasury bond investors at ease that the Fed can hold off raising rates to combat inflation. Higher rates and inflation tend to erode the value of fixed-income investments, so Friday's news was reassuring to bond investors.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.39 percent from 6.57 percent, with points increasing to 1.12 from 1.10 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.95 percent from 6.14 percent, with points increasing to 1.16 from 1.10 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 7.09 percent from 7.22 percent, with points increasing to 1.59 from 1.56 (including the origination fee) for 80 percent LTV loans.
The National Association of Realtors (NAR) said Thursday that the number of existing homes sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April. Sales remain 16% below the 5.93 million-unit pace in May 2007, the report showed. And Thursday's report marks only the second time in 10 months that sales have increased. Home buyers may finally be getting off the fence as prices have dropped substantially in many markets. The large supply of homes on the market favors buyers, but it should take several more months to draw the inventory down.
More home sales will lead to an advantage for those looking to refinance in two important ways. First, increased demand leads to increased home prices, creating a higher equity value for those refinancing. Secondly, a more stabilized housing market will bring more investor and lender competition into the mortgage market and bring mortgage rates down. Lenders will take on less of a profit yield on the interest rate as perceived risk diminishes with stable and rising home values.
For the week, financials lost 6.5%. This is not a positive sign for the economy or mortgage rates. Mortgage investors and lenders are still on the diving board due to their continued financial liquidity issues. Those with cash are hoarding and those with more subprime write-downs to come are only participating in low ltv and low credit risk mortgages. Just another reason to always check FHA refinance options when getting a quote.
The Chicago PMI and Unemployment Rate report will be coming up in the next week. The market is spooked at the moment, so just about anything, both positive or negative relating to inflation, the housing market, employment, spending, currency, or financial liquidity will result in large moves one way or the other.
The current dip in mortgages could be an opportunity for those looking to refinance and waiting for lower refinance mortgage rates. The concern is that continued inflation will increase mortgage rates for some time to come.
May the Mortgage Rates be with You!
Refinance Tool Box
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.39 percent from 6.57 percent, with points increasing to 1.12 from 1.10 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.95 percent from 6.14 percent, with points increasing to 1.16 from 1.10 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 7.09 percent from 7.22 percent, with points increasing to 1.59 from 1.56 (including the origination fee) for 80 percent LTV loans.
The National Association of Realtors (NAR) said Thursday that the number of existing homes sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April. Sales remain 16% below the 5.93 million-unit pace in May 2007, the report showed. And Thursday's report marks only the second time in 10 months that sales have increased. Home buyers may finally be getting off the fence as prices have dropped substantially in many markets. The large supply of homes on the market favors buyers, but it should take several more months to draw the inventory down.
More home sales will lead to an advantage for those looking to refinance in two important ways. First, increased demand leads to increased home prices, creating a higher equity value for those refinancing. Secondly, a more stabilized housing market will bring more investor and lender competition into the mortgage market and bring mortgage rates down. Lenders will take on less of a profit yield on the interest rate as perceived risk diminishes with stable and rising home values.
For the week, financials lost 6.5%. This is not a positive sign for the economy or mortgage rates. Mortgage investors and lenders are still on the diving board due to their continued financial liquidity issues. Those with cash are hoarding and those with more subprime write-downs to come are only participating in low ltv and low credit risk mortgages. Just another reason to always check FHA refinance options when getting a quote.
The Chicago PMI and Unemployment Rate report will be coming up in the next week. The market is spooked at the moment, so just about anything, both positive or negative relating to inflation, the housing market, employment, spending, currency, or financial liquidity will result in large moves one way or the other.
The current dip in mortgages could be an opportunity for those looking to refinance and waiting for lower refinance mortgage rates. The concern is that continued inflation will increase mortgage rates for some time to come.
May the Mortgage Rates be with You!
Refinance Tool Box
posted by Jim Bisnett at
9:13 AM
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