by Tyler Osby on January 30, 2012
A Large Amount of U.S. Economic Data Due for Release
Mortgage rates are poised to move. Unfortunately, we can’t know in which direction.
Some of the news that will move markets include :
- Monday : Personal Consumption Expenditures
- Tuesday : Consumer Confidence; Case-Shiller Index
- Wednesday : Construction Spending
- Thursday : Weekly Jobless Claims
- Friday : Non-Farm Payrolls;Factory Orders
Of all of the economic releases, Friday’s Non-Farm Payrolls has the most potential to move markets. More commonly called “the jobs report”, Non-Farm Payrolls details the monthly change in national employment and the national Unemployment Rate.
Jobs are believed to be the key to U.S. economic recovery so strength in jobs should result in higher mortgage rates throughout Iowa and the country.
Mortgage rates remain very low. If you’re nervous about mortgage rates rising this week or next, it’s as good of a time as any to lock your rate with a lender, and start moving toward closing.
Why Am I Posting A Calendar?
I provide this weekly news update because too often when we’re shopping around, we ask the wrong questions. The first thing you’ve got to have your antenna up on is economic news if you want to have any idea what direction rates are moving.
As a Consumer, How Do You Keep Posted on the News?
I’ll do my best to keep you posted throughout the week via Twitter. If you’re interested in finding out more about what effects mortgage rates and which direction they’re headed, feel free to follow me!
Work With Mortgage Professionals In The Advice Business
It’s important to recognize that advice is extremely valuable when looking for a mortgage. The right advice can literally save you thousands of dollars, while the wrong advice can cost you the same. Some mortgage professionals really don’t know what mortgage rates are based on, period. If you want to get the best deal, having a professional that can give you that type of advice is extremely important.
So You Say, What Are Mortgage Rates Currently?
I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.
Truth be told, there are literally 27 different factors that go into a custom rate quote. There are also thousands of programs (constantly changing as well). It’s extremely important that you are educated on what is available and most importantly what is the best mortgage plan for you to personally implement.
It’s natural to have a list of questions. I’d love to help work through them with you and educate you on what you need to know about the mortgage process. I can help with everything from how to pre-qualified to what to do after closing (where I will continue working for you)!
It’s what we do, and it would be my honor to add you to our list of raving fan clients. If you’re currently looking for a mortgage loan or know someone that might have questions about one, please have them contact me. I’d be happy to assist them. It’s literally what I love doing! I promise to take great care.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on January 30, 2012
Setbacks in Greece’s Debt Negotiations Continue to Help Out U.S. Mortgage Rates
Mortgage markets improved last week as news from the Federal Reserve, the U.S. economy, and Europe combined to spur new demand for mortgage-backed bonds.
Conforming mortgage rates rallied from Wednesday through Friday’s close, ending the week near all-time lows set earlier this year.
Last week’s rally was sparked by the Federal Open Market Committee.
After its first meeting of the year, Chairman Ben Bernanke & Co. changed its projection for “exceptionally low rates” to at least late-2014. Previously, the Fed had said its benchmark Fed Funds Rate would remain low until 2013.
This, in conjunction with the Fed’s message that further economic stimulus may be coming, led Wall Street investors to increase their bets on mortgage bonds, pushing up prices and pushing down yields.
Lower yields means lower rates.
Mortgage rates were also helped lower by mixed data on the U.S. economy including weaker-than-expected housing reports, and another setback in the Greece sovereign debt negotiations.
Each time that Eurozone leaders have failed to reach an expected accord with Greece since 2010, mortgage rates have dropped. Last week was no different.
Specifically, What Did Those Reports Say?
Each week, I put up an economic calendar of news coming out that following week. Here’s the what actually happened with those reports last week:
What Impacts Mortgage Rates?
If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:
- Economic News. (Like the calendar above).
- International News. (major events, pending legislation, war related news, etc).
- Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).
What Are Rates Based On?
It’s been mentioned before, but as a common reminder – mortgage rates are only based on one thing, Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.
Looking For Mortgage Rates?
If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote. Each scenario is different (there are 27 different factors a mortgage rate is determined by). If you or someone you currently know are looking for a mortgage, I’m here to help!
Information without obligation. That’s my policy. If you like what you hear, my team and I would love to help you out with your mortgage! Our contact information is on the top right hand side of this page!
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on January 27, 2012
Real Estate is Local
After 3 consecutive months of growth, the housing market appears to have eased a bit in December.
According to the National Association of REALTORS®, December’s Pending Home Sales Index slipped 4 percent from the month prior. The index measures the number of homes under contract to sell nationwide, but not yet sold.
Despite falling below its benchmark “100 value”, December’s Pending Home Sales Index is the reading’s second-highest value since April 2010 — the last month of last year’s home buyer tax credit program.
In other words, the housing market continues to show signs of improvement, propelled by low home prices and the cheapest mortgage rates of all-time.
Freddie Mac’s mortgage rate survey put the 30-year fixed rate mortgage at an average of 3.96% in December — a 75-basis point improvement from December 2010. This helps to make homes more affordable nationwide.
Regional Home Sales Index varied :
- Northeast Region: -3.1 percent from November 2011
- Midwest Region : +4.0 percent from November 2011
- South Region : -2.6 percent from November 2011
- West Region : -11.0 percent from November 2011
But even regional data is only so helpful. Like everything in real estate, data must be local to be relevant.
Throughout the West Region, for example, the U.S. region in which pending home sales fell the most, several states must have performed better than the regional average. And, undoubtedly, there were cities, towns, and neighborhoods that experienced marked market growth.
Unfortunately, the Pending Home Sales Index can’t capture that data. Nor can it identify the markets in which home sales suffered.
For today’s Urbandale home buyers and sellers, therefore, it’s important to understand your local market and the drivers of local activity. Reports like the Pending Home Sales Index can paint a broad picture U.S. housing but for data that matters to you, you’ll want to look local.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on January 25, 2012
Fed Funds Rate to Remain Unchanged
Today, the Federal Reserve’s Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The Fed Funds Rate has been near zero percent since December 2008.
For the third consecutive month, the Fed Funds Rate vote was nearly unanimous. Just one FOMC member dissented in the 9-1 vote, objecting only to the language used in the Fed’s official statement.
In its press release, the Federal Reserve noted that the the U.S. economy has “expanding moderately” since its last meeting in December 2011, adding that the growth is occurring despite “slowing in global growth” — a reference to ongoing economic uncertainty within the Eurozone.
The Federal Reserve expects moderate economic expansion through the next few quarters but is wary of “strains” from global financial markets, and these three threats to the U.S. economy :
- The housing sector remains “depressed”
- The unemployment rate remains “elevated”
- Fixed business investment has “slowed”
Next Meeting Slated for March 13, 2012
On the positive side, the FOMC said that household spending is rising and inflation remains in-check. The group also believes that employment will gradually improve nationwide going forward.
The Federal Reserve neither introduced new economic stimulus, nor discontinued existing market programs.
Immediately following the FOMC’s statement, mortgage markets rallied, pressuring mortgage rates to fall in and around Des Moines.
Mortgage rates remain near all-time lows and, for homeowners willing to pay points plus closing costs, conventional, 30-year fixed rate mortgages can be locked at below 4 percent. If you’re in the process of buying or refinancing a home in Iowa , it’s a good time to lock a mortgage rate with your lender.
The FOMC’s next scheduled meeting is a one-day event slated for March 13, 2012.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on January 25, 2012
First of 8 Scheduled Meetings of 2012
The Federal Open Market Committee adjourns from a scheduled 2-day meeting today, its first of 8 scheduled meetings this year.
The FOMC is a designated, rotating, 12-person committee within the Federal Reserve, led by Federal Reserve Chairman Ben Bernanke. Members of the FOMC sub-committee are the voting members of the Federal Reserve; the ones that ultimately determine U.S. monetary policy.
The most well-known Federal Reserve monetary policy tool is the central bank’s Fed Funds Rate. The Fed Funds Rate is the prescribed interest rate at which banks borrow money from each other for a period of one night.
The Fed Funds Rate can only be changed by FOMC vote.
For home buyers and would-be refinancing households in Urbandale , it’s important to recognize that the Fed Funds Rate is an interest rate separate and distinct from “mortgage rates”. Mortgage rates are not voted upon by the Federal Reserve. Rather, mortgage rates are based on the price of mortgage-backed bonds, a security bought and sold among investors.
Historically, there is little correlation between the Fed Funds Rates and 30-year fixed rate mortgage rates throughout Iowa. Going back 20 years, the benchmark rates have been separated by as much as 5.29% and have been as near as 0.52%.
The spread has even gone negative, most recently in 1979 and 1981 — a period marked by high inflation.
Fed Outlook on U.S. Economy will Determine Rise or Fall of Rates
Today, the separation between the Fed Funds Rate and the average, 30-year fixed rate mortgage rate is roughly 3.60%. Beginning at 12:30 PM ET, however, that spread is expected to change. The FOMC will make its statement to the press at that time, and will release its quarterly forecast to the markets.
As Wall Street reacts to the Fed’s press release and projections, mortgage rates will move.
Investors expect the Fed to vote the Fed Funds Rate unchanged from its current range near 0.000 percent, but are unsure of how the Fed will characterize the U.S. economy. If the Fed speaks optimistically on the economy, stock markets should rise and mortgage bonds should fall, driving mortgage rates higher.
Conversely, if the Fed shows concern for future economic growth, mortgage rates should drop. Either way, today figures to be volatile one for mortgage markets.
When mortgage markets get volatile, the safe play as a rate shopper is to lock your mortgage rate immediately. There too much risk in floating.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
Call Tyler at 515-257-6729 
