Thursday, May 27, 2004

Holding Steady Freddie

The yield on the benchmark 10-year note that mortgage lenders use to

set rates fell to its lowest level in weeks. This edged mortgage

rates down from yesterday`s levels, but not enough to change them.

That said rates are holding pretty steady freddie. But we wouldn't call it an actual drop.

Whether rates dive into 5 percent bracket only time will tell. More interestingly would be the impact such a dive would have on the housing and mortgage market.

Tuesday, May 25, 2004

Home Buying Refinancing See Saw

Over the past several days mortgage rates have been on a see saw.

The likelyhood of mortgage rates heading up hinge on the the following IFs

If the fret over oil prices continues to subside and gas prices follow

If violence in Iraq settles

If shoppers continue snapping up homes and buying summer clothes.

If home sales continue to surg

If job claims decline

If manufactoring picks up

If mortgage rates continue steady

If real estate financing and resultant refinancing remains robust

If money saved from the past three year home loan refinance wave continues to go undepleted...

...if so rates can be expected to continue heading up.

Other Factors causing the see saw effect seen over the past week could bring interest rates down and trigger another refinance wave are little improvement in the Mid-East situation. Little imrovement in oil and gas prices. A significant increase in unemployment levels. An ongoing surge in home sales over the next six months would open the way for potential refinancing.

For now however home refinancing has decreased significantly as rates rise. Interest rates should stabilize and resultant home refinancing and home buying should move to modest levels but steady.

Friday, May 21, 2004

Rates Take A Dip - Hello Down There!

Rates take a dip on the charts indicating that the economy still has work to do getting itself on its feet. Still with rates as low as they are lenders and merchants wonder why loan activity has declined so sharply. It would seem that folks have greater incentive to pour borrowed money into merchant coffers while lowering their interest rates and perhaps saving a bundle on exhorbitant interest rate fees.

The question is how long will rates continue this dip and stall? At present there may be more factors leaning toward a continuation of the present scenerio over the short term. However it must be noted that June is likely to put new factors on the table one being the much loathed but highly expected Fed rate hike.

That said homeowners and buyers who have held out for better rates may see a quickly dimming light at the end of a rather short tunnel.

Thursday, May 20, 2004

Yikes! Rate Hikes! - Will Rising Rates Hinder Economic Growth?

Mortgage rates have trended higher since mid-March with rising Treasury yields as data suggested faster U.S. economic growth and growing inflationary pressure. Higher mortgage rates have curtailed refinancing activities. Will this hinder economic growth? The experts say the economy will still continue to grow at a steady pace.

It's undeniable that the mortgage industry thrived on home refinancing alone while homeowners successfully locking in rate below 6 percent saved thousands in loan costs when refinancing.

Home refinancing became something of a staple. Home construction increased, renovation and remodeling boosted the real estate industry. If you got the cash out option you had more money to spend and that benefited merchants everywhere. Folks were seemly happy. Now however rates are rising and get this, the Feds seem intent on raising them further.

No big deal? Perhaps not, if it weren't for the fact that home refinancing is dropping off at an accelerated pace.

One wonders, if the economy can still turn itself around without the help of low interest rate home financing.

We cannot ignore the fact that home sales and construction have yet to show signs of dropping off. And recent mortgage rate trends show an actual dip in rate levels.

The average interest rate for 30-year fixed-rate mortgages in the MBA actually decreased to 6.21 percent from 6.32 percent from one week earlier

A comparison to previous years show that rates are still at attractive levels as many borrowers are still paying loan costs at 7.0-8.0% and others are seeking to benefit from shorter term loans where rates are under 6 percent. Not Bad, Huh? ...time will tell.

Still I must admit friends and family made out like a fat cat these past three years taking advantage of historic rates and refund benefits. I pity the fool who let this opportunity get by him. read more here

Wednesday, May 19, 2004

Where Are Rates Headed? This Way!

Interest rates steady move in the upward position has slowed over the past several days. Meanwhile mortgage applications to purchase fell 8.1 percent and refi applications dropped by almost 17 percent from the previous week, accounting for only 37 percent of all mortgage applications.

Where were rates one year ago? 5.125 percent and heading lower. Refis made up 76 percent of applications.

Todays Rising yields did not move high enough to influence mortgage lenders to raise rates to the next level on most products. Upcoming economic reports showing weakness could impact rates for a slight dip otherwise rates should remain steady.

Tuesday, May 18, 2004

What A Ride - Interest Rates May Dip Slightly

Yesterday was quite some ride. I'm still reeling from it all.

A trio of negative developments on the financial and political level sent prices of oversold U.S. Treasury securities to their highest levels in weeks, as yields edged down. The bombing in Baghdad frustrated Iraq self-governing transition efforts. Then there was the impact of the surprise election of the Congress party in India on its economy.

The Price of oil hit a new high causing further concerns about the effect of soaring oil prices on U.S. economic growth. Add to this the fret about when the Fed will increase interest rates and Poof! The stage is set for a slight decrease in mortgage rates.

From the looks of things I'd say if other economic reports come in weaker than expected and global events continue to influence traders to buy Treasuries, prices will rise and yields will fall. This scenario could result in a slight to significant decrease in some mortgage rates. What then? I've got my ideas.