07
May
By support
Financial Reports

What’s Ahead For Mortgage Rates This Week – May 7th, 2018

What’s Ahead For Mortgage Rates This Week – May 7th, 2018Last week’s economic releases included readings on inflation, construction spending and private and public- sector payrolls. Weekly readings on mortgage rates and first-time jobless claims were also posted.

Inflation Meets Fed Goal, Construction Spending Lower

March inflation reached a year-over-year rate of two percent, which is the Federal Reserve’s goal for inflation. Inflation rose by 0.20 percent in March to 0.40 percent; analysts expected inflation to rise 0.50 percent. Core inflation, which excludes volatile food and energy sectors, met expectations with 0.20 percent growth.

Construction spending was lower in March with a negative reading of -1.70 percent. Analysts predicted an increase of 0.50 percent based on February’s one percent increase in construction spending. Construction costs were five percent higher year-over-year, and builders cited long-standing concerns with lot shortages. Tariffs on building materials fueled rising materials costs. Analysts said construction spending remains strong.

Mortgage Rates, Jobs Data Mixed

Freddie Mac reported lower mortgage rates last week as the average rate for a 30-year fixed rate mortgage dropped three basis points to 4.55 percent. Rates or a 15-year fixed rate mortgage were one basis point higher at 4.03 percent. Rates for a 5/1 adjustable rate mortgage averaged five basis points lower at 3.69 percent.

The Federal Reserve’s Federal Open Market Committee elected not to raise the target federal funds rate from its current range of 1.50 to 1.75 percent; when fed rates are raised, private lenders including mortgage banks typically raise home loan rates.

New jobless claims were lower last week with 211,000 new claims filed. Analysts expected 225,000 new claims based on the prior week’s reading of 209,000 new jobless claims.

ADP Payrolls reported 204,000 private-sector jobs added in April as compared to the March reading of 228,000 jobs added. The Commerce Department reported 164,000 public and private sector jobs added in April, which was lower than expectations of 184,000 jobs added. The national unemployment rate for April dipped to 3.90 percent as compared to expectations of 4.0 percent and March’s reading of 4.10 percent.

What‘s Ahead

This week’s economic readings include job openings, mortgage rates and new jobless claims. The University of Michigan will also release its monthly Consumer Sentiment Index.

03
May
By support
Mortgage

Understanding the Basic Interest Rates Difference Between Fixed and Variable

Understanding the Basic Interest Rates Difference Between Fixed and VariableHome loans are available in an assortment of lending packages, but the big difference that consumers need to pay attention to at a minimum is how the interest charge is calculated. Interest is the margin that represents the profit and risk offset for a lender financing a consumer’s home purchase.

With loans lasting over 30 to 40 years now, the amount of money that can be made can be two or three times the purchase value of the home involved. So it’s calculation method is important for the borrower.

A Fixed Rate

A fixed rated is one where the home loan interest rate does not change. So, if a person takes out a 30-year home loan with an interest rate of 5 percent, that interest rate charge per year will not change at any time during the 30 years of repayment. It provides stability for financial planning, especially for buyers who just want to pay the same payment monthly and not fuss about anything else.

A Variable Rate

A variable interest rate is one in which the interest on a home loan can change over time. The most frequent set up involves an introductory rate period where the interest rate on a 30 year loan is attractively low for the first one, three or five years. Then, if the loan is still in place, the interest rate may adjust up or down and starts to track an index, usually based on a stock or bond market. Then a “margin” is added to the index to determine the current mortgage interest rate.

The risk is whether that newly adjusted interest rate is higher than what was available previously as a fixed interest rate. The variable rate may work very well for those who only want to hold a home for a short period and then sell it for a profit. It can become a problem, however, if the loan is held longer than the change period when the variability kicks in with a market index.

Pros And Cons

The major advantage of a fixed loan is that is very straightforward, simple and can be refinanced years later if the market starts to offer much lower rates. That protects a consumer from fluctuating costs, especially when running a household on a set budget. However, the same formula is often more expensive in the first few years, especially if the home will only be owned for a few years.

The big advantage of the variable interest rate loan is realized by investors or those who only plan to stay in their home or home loan for a short period of time. Investors who think the real estate market will go up can make big profits with far less carrying costs in interest since variable rate loans often have a low introductory period. However, if they guess wrong or are forced to keep the loan longer than planned, the buyer could get stuck with a more expensive, fluctuating monthly loan payment.

Which one works best often depends on the buyer and his specific interests in a home purchase. Talk to your trusted mortgage professional today about interest rates to help you determine which option is best for you. 

30
Apr
By support
Financial Reports

What’s Ahead For Mortgage Rates This Week – April 30th, 2018

What's ahead for mortgage rates april 30 2018Last week’s economic reports included readings from Case-Shiller Home Price Indices, new and existing home sales and weekly readings on mortgage rates and first-time jobless claims.

Case-Shiller: Home Prices Rise to Near Four-Year High

February home prices rose 6.30 percent year-over-year and 0.50 percent month-to-month. Home prices rose just shy of a record set in 2014. The 20-City Home Price Index reported home prices were 6.80 percent higher year-over-year and rose 0.80 percent month-to-month in February. The year-over-year reading surpassed the peak reading in 2006. Home prices accelerated in contrast to analyst expectations that they nay slow as buyers deal with a short supply of homes for sale.

Cities with the three highest readings in year-over-year home price growth were Seattle, Washington with 12.70 percent growth, Las Vegas, Nevada home prices rose 11.60 percent, and San Francisco, California home prices rose by 10.10 percent according to Case-Shiller’s 20-City Home Price Index for February.

Severe shortages of homes and high demand in the west and in areas impacted by the housing bubble burst are driving the rapid rise of home prices; while it appears that homebuyers may be sidelined by high home prices, increasing home sales suggest that buyers may be buying before higher prices cut them out of the market.

Sales of New and Existing Homes Surpass Expectations in March

Sales of pre-owned homes rose to 5.60 million sales on a seasonally-adjusted year-over-year basis. Analysts expected a reading of 5.52 million sales based on February’s reading of5.54 million pre-owned homes sold. Sales of new homes also exceeded expectations with a sales rate 0f 694,000 sales on a seasonally-adjusted annual basis. Analysts expected a reading of 634,000 new hone sales. February’s reading was 667,000 new home sales. As with the boost in sales of pre-owned homes, analysts said that buyers are anxious to buy before they’re priced out of the market or cannot qualify for mortgage loans.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates for the third consecutive week. Rates for a 30-year fixed rate mortgage averaged 4.58 percent and were 11 basis points higher. The average rate for a 15-year fixed rate mortgage was 8 basis points higher at 4.02 percent; The average rate for a 5/1 adjustable rate mortgage was seven basis points higher at 3.74 percent. Rising Treasury yields were driven by higher commodity prices drove mortgage rates higher.

Economic indicators have steadily strengthened, which traditionally boosts home prices. While analysts have shown concerns over rapidly rising home prices and mortgage rates, the Mortgage Bankers Association reported mortgage applications were 11 percent higher year-over-year.

New jobless claims fell to 209,000 first-time claims filed as compared to expectations of 230,000 new claims, and the prior week’s reading of 233,000 new claims filed. Lower jobless claims indicate fewer layoffs and strengthening labor markets.

What’s Ahead

This week’s economic releases include readings on inflation, job growth, and national unemployment. Weekly readings on mortgage rates and new jobless claims will also be released.