News of rising rates was everywhere last week as inflation fears dominated the mortgage market. Equity markets have improved, and stocks have been trading higher amid inflationary reports. This is putting a lot of pressure on the mortgage backed securities which is leading to an increase in rates. This week is shaping up to be another volatile week as well, and several important economic reports are due to be released. Rising defaults are also increasing risk and decreasing investment in mortgages which is adding pressure to interest rates.
We seem to be in a situation of "no news is good news," at least as far as mortgage rates are concerned. These "quiet" periods, however - even weekends - have proven to be no friend of the markets lately. There's too much time to worry, perhaps, and with a calendar empty of fresh data until Thursday, there's almost five days of worrying available until the next cascade.
Overall, it's shaping up to be a fairly active week in the mortgage market. With several important economic reports on tap, we will likely see noticeable movement in mortgage rates more than one day.
The first piece of news will come late Tuesday morning when the Conference Board posts their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. This is important because consumer spending makes up two-thirds of the U.S. economy. If the CCI reading is weaker than expected, we may see bond prices rise and mortgage rates drop Tuesday. Current forecasts are calling for a reading of 50.0, which would be a lightly lower reading than June's reading.
The first look at second quarter GDP is due which will form the "are we in a recession or not?" argument. The employment cost index will help us see if all these price pressures are bleeding into wages, and the employment report will tell us just how poor hiring was for July. A tone of weakness should help trim this week's rise in rates, but just a little.
The most important day of the week is Friday with the Employment and ISM reports being released, but Thursday's GDP release is highly important to the markets and could heavily influence mortgage pricing.
- If you have an adjustable rate or need to get cash out of your home, don't wait for rates to go up even more.
- If you have found the right home to buy, secure your financing today.
Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on qualification criteria from program to program. If you like the rate today, the safe bet is to lock. Even if rates improve, they wouldn't improve enough in the short term to make you cry about it. But if you are an ardent market bear, and accept the risk of negative mortgage headlines, and believe the economy will just get more bad news next week, and you have the money to risk, you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking and then watching rates get a little better.
Starting Monday, August 4th, this weekly report will be available by email only. If you would like to continue receiving this report, please email me at email@example.com. The daily rate lock advisory report will still be posted on this blog.
As always, you can call me toll-free at (866) 684-1233 ext. 3913 or chat with me online at http://www.lewcorcoran.com/ to answer any questions you have about mortgage programs and interest rates, and to discuss your best loan options.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB