MARKET COMMENT Mortgage bond prices ended the week higher pushing mortgage interest rates slightly lower. Rates improved the first portion of the week tied to weaker stocks and a lower than expected consumer confidence reading. Unfortunately a bounce back in stocks mid week erased the earlier positive movements. Income, outlays, and ISM data Friday morning all came in near expectations helping post some overall improvements for the week. Rates finished the week better by about 1/8 of a discount point.
The employment report Friday will be the most important release. Factory orders data the beginning of the week will set the initial tone for trading. The ADP employment report Wednesday could also result in some mortgage interest rate volatility.
- Factory Orders; Oct. 4; Consensus Estimate Down 0.5%; Important. A measure of manufacturing sector strength. A larger decrease may lead to lower rates.
- ADP Employment; Oct. 6; Consensus Estimate 17k; Important. An indication of employment. Weakness may bring lower rates.
- Consumer Credit; Oct. 7; Consensus Estimate Down $1.1 billion; Low importance. A significantly large increase may lead to lower mortgage interest rates.
- Employment; Oct. 8; Consensus Estimate 9.7%, Payrolls -15k; Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
MORTGAGE PROFESSIONALS Obtaining a mortgage is often a confusing task that can also lead to frustration. The reason for the confusion is due to the fact that mortgage financing is complex. The good news is that this complexity provides consumers with options and choices best suited to fit their needs.
Everyone’s financial position is unique. Some people have large cash reserves that can be used for down payments while others want to get into a home with little or no money down. Credit ratings vary from person to person. In addition, future plans vary. Some people plan on staying in their home for the rest of their lives while others only plan on staying for a few years.
These facts alone make comparing your mortgage to your neighbor’s based on rate alone a flawed endeavor, yet many people attempt to do so. Admittedly, everyone wants a good deal. Keep in mind that comparing rates is just one component of the entire mortgage. Other variables include the term, down payment requirements, income qualifications, credit ratings, reserve requirements, current debt, prepaid points, and many more.
A mortgage professional is able to take all of these variables that are unique to each individual and help a person obtain the mortgage loan that works best for their situation. The service they provide is time consuming and complex. However, the rewards of dealing with a professional carry forward throughout a borrower’s life. Making wise financial decisions today helps to pave the way for a safe and secure future.
Mortgage interest rates currently remain historically favorable. There is much uncertainty about the future of the economy. If the economy recovers and inflation emerges mortgage interest rates may head higher. Taking advantage of mortgage interest rates at these levels is a sure thing. A cautious approach to lock decisions is necessary to protect against the possibility of a future increase in mortgage interest rates.
Source: Courtesy of Todd Kabel, US Bank, Nashville, Tennessee