What's Ahead For Mortgage Rates This Week : October 16, 2011

Mortgage bonds suffered through another tough week last week as rising optimism that Eurozone leaders will "rescue" Greece plus stronger-than-expected economic data in the U.S. led bonds lower for the second straight week.

Conforming and FHA mortgage rates in california moved sharply higher. After reaching an all-time low just two weeks ago, 30-year fixed mortgage rates are now at a 2-month high.

There were several big stories in the mortgage bond market last week. Each was bad for consumer mortgage rates.

The first big story was tied to Greece. As meetings continue between Eurozone leader and rhetoric heats up, it's becoming increasingly clear that Greece will receive its next wave of debtor aid. The planned rescue of Greece is undoing the safe haven buying that characterized the mid-summer financial markets. 

With investors more willing to take risks, mortgage bonds are selling off, and rates are rising.

The next big story was the release of the Federal Reserve's September meeting minutes. The central bank's meeting recap showed that the Fed considered additional stimulus beyond its Operation Twist, even as inflationary pressures are increasing. Because inflation lowers the value of outstanding mortgage bonds, rates climbed post-release.

Lastly, last week we learned that the U.S. consumer will not be deterred. Retail Sales grew 1.1 percent in September -- much more than Wall Street's expectation. This, too, caused a mortgage bond sell-off and led to a late-Friday surge in rates.

Markets should open worse this morning, pressuring rates higher yet again. However, there's plenty of data this week for which rate shoppers should be watching :

• Tuesday : Producer Price Index; Housing Market Index
• Wednesday : Consumer Price Index; Housing Starts
• Thursday : Existing Home Sales

In addition, there are 8 Fed speakers this week. Each can move markets.

Despite rising rates, mortgage rates remain low nationwide. If you've been shopping for a rate, it's not too late to lock in. Talk to your loan officer and make a plan to get locked, and get closed. 

Retail Sales Expected To Rise; Mortgage Rates Should Rise, Too

The American Consumer is alive and well, it seems.

Friday morning, the Census Bureau will release its Retail Sales figures for September. The report is expected to show an increase in gross receipts for the 15th straight month with analysts predicting a 0.6 percent increase from August.

The projected increase represents the largest jump in Retail Sales in six months and would likely lead mortgage rates higher for buyers in Riverside and   nationwide.

The connection between Retail Sales and mortgage rates is fairly straight-forward. Retail Sales are the majority component of "consumer spending" and consumer spending represents the majority of the U.S. economy -- up to 70 percent, by some estimates.

And, as the economy goes, so go mortgage rates.

10 months ago, mortgage rates shot forward to start the year. This is because expectations were high for a strong economic rebound. Conforming and FHA rates crossed 5 percent at the time and were headed toward six.

By mid-April, though, it was clear that economic data was falling short of predictions. As a result, mortgage rates declined, kicking off the 2011 Refi Boom. Then, by August, on ongoing economic softness, mortgage rates in california fell further, making new all-time lows.

Expectations for a recovery have returned. Rates are now rising.

Last week's strong jobs report sparked hope for the U.S. economy and investors have been voting with their dollars. Mortgage rates are now up 7 consecutive days and Friday's Retail Sales report could cement the trend.

If you're shopping mortgage rates today, there's risk in "floating". You may want to lock your rate before Friday's Retail Sales report drives rates even higher.

The Retail Sales report will be released at 8:30 AM ET.

Retail Sales Rise For 12th Straight Month In June

The American Consumer will not be deterred.

Despite worsening jobless figures and an increase in the Cost of Living, Retail Sales are climbing. In June, for the 12th straight month, retail receipts rose, excluding cars and auto parts.

Analysts expected no change from May. Instead, receipts topped $321 billion -- an all-time record.

For home buyers and would-be refinancers in Riverside , this is a bit of unwelcome news. Mortgage rates are rising in the wake of the Retail Sales data release.

This is because Retail Sales account for roughly half of consumer spending, and nearly one-third of the economy overall. A rise in Retail Sales, therefore, suggests stronger growth ahead.

Here's how it happens.

As consumers spend more money, businesses sell more product. So, to accommodate burgeoning demand, business hire additional employees, and are forced to make additional capital expenditures as well. 

This rise in spending prompts other businesses to hire and spend; to meet their own respective demand surges. There's a chain reaction-like effect.

Then, with businesses carrying larger payrolls and bigger staffs, federal, state and local governments realize bigger tax bases and can fund new and existing projects. 

This, too, leads to hiring and the cycle repeats.

A weak economic outlook dragged down mortgage rates last week. This week's Retail Sales data reversed that flow. Mortgage rates are higher by 1/8 percent -- roughly $8 per $100,000 borrowed.

Retail Sales are up 8 percent from a year ago.

Mortgage Rates Surge On May Retail Sales Figures

The jobs market is recovering slower than expected, and so is housing. But neither condition has slowed U.S. consumers.

According to the Census Bureau, Retail Sales rose for the 11th straight month in May. Excluding cars and auto parts, sales receipts climbed to $322 billion last month. It's an all-time high and another example of the U.S. economy's resiliency.

Wall Street didn't expect such results. As a result, mortgage rates worsened Tuesday.

By a lot.

The connection between Retail Sales and mortgage rates can be fairly tight in a recovering economy. Retail Sales accounts for almost half of all U.S. consumer spending, and nearly one-third of the economy overall. The May report, therefore, showed the economy may be on more solid footing than economists expect.

Plus, lately, as the economy goes, so go mortgage rates in Corona and nationwide. 

When the economy has shown signs of life, mortgage rates have increased. When the economy has shown signs of a slowdown, mortgage rates have dropped.

It's why mortgage markets reacted the way they did Tuesday; May's Retail Sales data was strong. The resultant surge in conforming mortgage rates -- from market open to market close -- turned into one of the year's fiercest, raising average mortgage rates well off their 7-month lows established earlier this week.

At today's rates, each 0.125 percent change in rates yields a payment difference of $7.50 per $100,000 borrowed. Yesterday, some product rates rose by as much as 0.250 percent. It put a dent in home affordability and household budgets.

With Retail Sales are up 8 percent from last year, therefore, and showing few signs of a slowdown, today may be a prudent date to lock a rate with your lender. As the economy continues to grow, rates are expected to rise.

What's Ahead For Mortgage Rates This Week : June 14, 2010

Mortgage markets posted four good days last week and one awful one.  Unfortunately for rate shoppers in california , that one bad day outweighed the gains of the other four and mortgage rates worsened on the week overall.

Despite re-touching all-time lows on Tuesday and Wednesday, Conforming and FHA mortgage rates moved higher on the week.

There wasn't much domestic data on which for mortgage markets to move so rates took their cues from global economic activity. Strong data from Japan and China, plus an improving outlook from the Eurozone, sparked optimism among Wall Street investors. Cash poured into the stock market and it happened at the expense of bonds -- including the mortgage-backed ones.

It's the primary reasons rates rose and not even the worst Retail Sales report in 8 months could undue the damage.

Often, weak Retail Sales data causes mortgage rates to fall. Last week, however, that wasn't the case. 

This week, there's cause for rates to rise again with Wednesday emerging as a "data day".

First, at 8:30 AM ET, the government releases two key housing statistics and one major gauge for inflation -- Housing Starts, Building Permits and Producer Price Index, respectively.  Strength in any or all three should lead mortgage rates higher.

Then, at 5:45 PM ET, Fed Chairman Ben Bernanke makes a public speech and anytime Bernanke speaks, mortgage rates can move.

Mortgage rates remain unnaturally low and a lot of Americans have taken advantage already. If you're a homeowner and you've wondered whether or not a refinance makes sense, talk to your loan officer straight away. Low rates like this can't last forever so lock one in while you can.

Retail Sales Report Should Spell Higher Mortgage Rates For Wednesday

Consumer spending is alive and well, it seems -- unwelcome news for today's home buyers. 

Wednesday, the Census Bureau will release its March Retail Sales figures and the report is expected to show higher sales receipts for the 9th straight month. A strong reading like that should spell higher mortgage rates in Corona and nationwide.

The connection between Retail Sales and mortgage rates is fairly tight. Retail Sales are "consumer spending" and consumer spending accounts for the majority of the U.S. economy. The U.S. economy, of course, is a dominant force in setting the direction in which mortgage rates are headed.

For example, in 2010, it was a weak economy and murky outlook that helped drive mortgage rates to all-time lows. Since last year, however, the jobs market has started its recovery, monthly receipts have returned to all-time highs, and the Federal Reserve is revising growth estimates for 2011.

Not surprisingly, mortgage rates have reversed, too.

As compared to 6 months ago, conforming rates are higher by 0.750%. Home affordability across california is taking a hit. Plus, the stronger the economy appears to be, the more likely for mortgage rates to climb more.

It's why tomorrow's Retail Sales report is so important. 

If you're under contract for a home, or even evaluating the merits of a refinance, there's a lot of risk in "floating" your mortgage rate. The more prudent plan is to find a rate at which you're comfortable with the payment, and lock it in.

And you may want to take that lock sooner than you had planned -- if only to protect your monthly payments. Once tomorrow's Retail Sales report hits, it may be too late. Especially if receipts rise for the 10th straight month.

The Retail Sales report is due for release at 8:30 AM ET.

Retail Sales Dropped In December And Now So Are Mortgage Rates

Mortgage rates are dropping this morning on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck.

Excluding motor vehicles and parts, December's "ex-auto" sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow.

The relevance of Retail Sales to home affordability isn't obvious, but it's definitely logical.

Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out "safe" investments.

It's the reason why stock markets often drop on weak economic data -- stocks are among the riskiest investment classes available.

Conversely, the best place to find safety is in the market of government-backed bonds.  This world includes products like U.S. Treasuries and many of the mortgage-backed bonds that help set mortgage rates for people in Moreno Valley.  Weak economic data puts mortgage bonds in demand.

For rate shopper, this is good news.  More demand for mortgage bonds causes mortgage rates to fall.  Mortgage rates are lower this morning because Wall Street is shedding some risk.

December's Retail Sales report closes out a year of generally-weak data.  2009 marks just the second time that Retail Sales fell year-over-year since the government started tracking it 40 years ago.  The other year was 2008.

For home buyers around the country, though, today may represent an opportune time to lock a mortgage rate.  Housing data is still improving and other economic indicators are showing strength.  Soon, Wall Street will shift from a "safe" mentality and move toward risk.

When it does, mortgage rates will rise.

What's Ahead For Mortgage Rates This Week : January 11, 2010

Data was sparse through 2010's first trading week last week, setting the stage for a week of momentum trading.

In up-and-down trading, mortgage pricing improved overall but the best rates of the week didn't last long.

Rates improved Monday and Tuesday as an oversold market corrected itself to better price points.  Then, in anticipation of the December jobs report, rates worsened Wednesday and Thursday.  Friday, after the jobs report was released, pricing proceeded to carve out a huge range before settling unchanged.

On average, lenders issued new rate sheets every few hours last week. It was a difficult week to shop for mortgages in california and elsewhere.

Unfortunately, this week doesn't figure to be much better. 

For the second straight week, the economic calendar is bare.  Traders -- like last week -- will be forced to rely on "gut feel" to make their trades.  That rarely bodes well for shoppers.  Especially because traders are facing a mortgage market in the midst of a terrible losing streak. 

Since reaching an all-time low December 1, 2009, 30-year fixed rate mortgages have worsened by 300 basis points, or 3 percent.

To a homeowner or rate shopper in Riverside , the math of 300 basis points looks like this:

• 5 weeks ago, a 4.625 percent mortgage rate required 0 points
• Today, the same 4.625 percent mortgage rate requires 3 points

1 point is equal to 1 percent of your loan size.

Last month's worsening is the worst 1-month deterioration in consumer mortgage rates from all of 2009.

If you're hoping for rates to fall back to early-December levels, know that it is possible. For this week, here's some things that could push rates in the right direction:

1. 3 Fed members are speaking. Each mention of economic under-performance in 2010 will be good for rates.
2. Retail Sales data is released Thursday. If the numbers are weak, mortgage rates should improve.
3. Consumer confidence surveys are released Friday. Lower confidence levels should help rates fall.

Be ready to lock at a moment's notice this week.  Rates may rise or fall, but markets are positioned toward the former.That's where momentum is pointing as of the Market Open today.

Keep an eye on rates and your loan officer on speed dial. Once the mortgage market starts breaking, it's expected to break quickly.

What's Ahead For Mortgage Rates This Week : December 14, 2009

Mortgage markets worsened for a second consecutive week last week amid debt default concerns and stronger-than-expected economic data. Dollars left the bond market and mortgage rates suffered.

After re-reaching an all-time low December 1, mortgage rates in Moreno Valley have since rolled back to mid-November levels.

Rates are still low right now. Just not as low.

And meanwhile, last week's big story -- the one that should concern mortgage applicants between now and early-2010 -- is the story of Retail Sales.

Last week, a government report showed that American consumers are spending more this holiday season than was expected.  The Retail Sales data implies that consumers are feeling more confident in themselves, and in the economy overall.

This is one of the last remaining pieces in the economic recovery puzzle.  Job growth, of course, is another, and both will be in focus this week as the Federal Open Market Committee meets for its final 2-day meeting of the year. 

The FOMC isn't expected to raise the Fed Funds Rate from its current "target range" near 0.000%, but when the FOMC adjourns at 2:15 PM Wednesday, its press release will dominate the news. 

Specifically, watch for verbiage on the expected economic growth for 2010 because no matter what the Fed says, mortgage rates will be in flux.  As one example:

• If the Fed says inflation is under control, mortgage rates should fall
• If the Fed says inflation pressures are growing, mortgage rates should rise

There's other news this week, too, including PPI and CPI -- 2 popular inflation gauges, plus some housing data, too.

If you need to lock a rate this week, it may be safer to lock prior to the FOMC's adjournment. Given the recent strength in Retail Sales and the reports of "crowded malls" this past weekend, the Fed may choose to revise its growth estimates for the economy -- a move that would be awful for mortgage rates.