MARKET COMMENT Mortgage bond prices rose last week, which pushed mortgage interest rates lower. Rates started off on a bad note the first portion of the week as equities rallied on hopes of additional Fed stimulus spending and stronger than expected data. Factory orders rose 2.4%, considerably higher than the expected 1.9% increase. Stocks took a roller coaster ride surging and falling hundreds of points throughout the week. The payrolls component of the employment report Friday disappointed estimates and helped rates improve significantly on the week. Despite the extreme volatility, mortgage bonds ended the week better by about 1/2 of a discount point.
The bond market is closed Monday for Labor Day. Trading may be volatile Tuesday following the extended holiday weekend. Equities will continue to factor into trading with the light data this week.
• Fed “Beige Book”; Sept. 7; Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
• Weekly Jobless Claims; Sept. 8; Consensus Estimate 405k; Important. An indication of employment. Higher claims may result in lower rates.
• Trade Data; Sept. 8; Consensus Estimate $53b; Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
• Consumer Credit; Sept. 8; Consensus Estimate $15.5b; Low importance. A significantly larger than expected increase may lead to lower mortgage interest 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: Todd Kabel, F&M Mortgage; Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee