Normally – Bad News in the Economic picture, pretty much anywhere, means Good News for Mortgage Rates. I work in an Industry that is driven by BAD NEWS. I tell folks it’s like a Hospital – “Everybody’s Sick… Business is Good.” So, if you’ve been looking for lower mortgage rates, you might think we could STILL see improvements.
Well, that’s simply been a bad strategy – because we’ve actually seen mortgage rates head HIGHER from the lows we experienced 2 weeks ago!
Mortgage rates seem to be currently driven on a fear that we will have Inflation ( a general increase in prices and fall in the purchasing value of money ) and the fear that the US Economy is doing exceptionally well, compared to our counterparts in Europe and around the world.
The down-trend in rates that shaved about a third of percentage point off the average 30-year Fixed Rate Mortgage since last November has certainly leveled off in the last four weeks, with fixed interest rates holding fast to present levels, about a quarter-percentage point above what we believe to be about 60-year lows. Over the last four weeks, rates for 30-year fixed rate mortgages have wobbled by less than two basis points overall, but a new blast of economic optimism (or perhaps a lack of increased pessimism) has them poised to firm a bit in the coming days.
READ: Rates are probably headed a little higher… in the next few weeks.
The weekly Conventional Fixed-Rate Mortgage Indicators we read, showed the overall average rate for 30-year fixed-rate mortgages declined by a single basis point this week (0.01%) to a national average of 3.79 percent (Per the CFPB Rate Checker). Driving Refinance Activity is primarily seen with FHA backed mortgages, because the Mortgage Insurance Rates for this program recently declined. With this declining monthly cost, many folks who purchased a home since early 2013 will normally see a $150 to $200 a MONTH reduction in their mortgage payments with a FHA Streamline Refinance. The National Average rate for a FHA-backed 30-year mortgage, last week, featured another two-basis point decline (.02%) to drift down to 3.58% percent (Per the CFPB Rate Checker).
Mortgage Rates February 2015 / What’s Ahead
Mortgage Rates are driven, effected by Economic news, and Economic Reports. They are also driven like other commodities on demand. New Home Sales, as one indicator of Demand of mortgages, are strong. So from a Demand for the product, so to speak, this should not be a factor in determining the direction of Mortgage Rates for the remainder of the Winter, at least in the South.
Economic Reports reported last week, and early today show turmoil, and depending on which “Magic Ball” you look into, you could easily make an argument that mortgage rates could drift a little lower – or spike higher by the end of the month.
The twin reports from the Institute for Supply Management told different tales about the present state of the economy last week. The ISM’s manufacturing gauge is now in a three-month deceleration, one that has seen the indicator trimmed from a relatively strong 57.9 in October to a present 53.5, the lowest value in a year’s time. Part of the cause for this decline is the result of slower growth overseas and a strong dollar – which makes our goods more expensive to foreign buyers.
It also means that Imports are cheaper – driving the cost of those goods lower… which is something Economist judging the direction of Mortgage Rates make note of.
With factory orders falling by 3.4 percent in December, it’s little wonder that manufacturers are singing the blues. In fact, December’s decline in orders was the fifth in a row; non-durable goods orders have slumped for six months now. This includes Cars – which have a huge impact on the overall health of our Economy, and therefore the direction of Mortgage Rates.
Unlike manufacturing, the Non Farm Payroll Jobs Numbers for January reported ahead of estimates last week. Several Economists have pointed out that Oil and Gas (Energy) jobs that added thousands of workers in the past 2 years are now declining with the cost of Gas. This improving picture of folks going back to work, might be further news that mortgage rates will increase early this summer, with an improving US Economy.
Mortgage Interest Rates February 2015, What We’re Watching
European stocks are headed lower today, based upon the decision of newly appointed Greek Prime Minister Alexis Tsipras to roll back austerity measures yesterday. In a statement over the weekend, he stressed that his country would not be asking for an extension to its current bailout.
Without the Austerity Measures, many believe it will be impossible for Greece to repay their debt. We thought this would put more pressure on Mortgage Rates, as it could signal an un-raveling of the Euro. So far, at least, we’ve only seen a 5 basis point reduction in the 10 year Treasury notes. (Not much change for Mortgage Rates).
As the conflict in the Ukraine region escalates, Germany’s Angela Merkel gave Russian President Vladimir Putin until February 11 to agree to an agreement that will end the fighting in eastern Ukraine. Along with France and Ukraine, the two will meet Wednesday to try and hammer out a deal. In our experience, ultimatums are normally bad news.
Highlighting weakness in the Chinese economy, data published on Sunday showed the country’s exports are lower than expected, and it’s imports are at the lowest they’ve been since May of 2009. Over all, many Economist are expecting China to lower its GDP target to its lowest annual growth rate in 24 years.
A decline in China could put pressure on the US Economy – and therefore change the direction of Mortgage rates.
THE BIGGEST NEWS MAKER, HOWEVER REMAINS…
Mortgage Rates in January saw a dip that followed the sharp decline in Oil. As Oil prices started to rise last week… so did Mortgage Rates. Seriously.
The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that oil demand growth was “yet to show any signs of accelerating.” However, it still hiked its forecast for 2015, predicting that low prices would help to boost sales later in the year.
While in this Economic snapshot, as in others, uncertainty remains the key – will it go up or down?
The developed world has been reducing consumption of oil for more than a decade, but China has more than picked up the slack. This has kept the price of crude oil high. Will that be the case in 2015, as China shows signs of a slowdown?
We believe that Oil will continue to be a major factor in moving the direction of Mortgage Rates for the remainder of 2015. Although the case can easily be made that Mortgage Rates will go higher – as the US gains momentum against other Economies… The case can ALSO be made that mortgage rates will go LOWER based upon a weakening Global Economy that will continue to affect the earnings of US Businesses relying on buyers in foreign markets.
I don’t have a Crystal Ball… but I have newspapers, and Browsers that will instantly tell me which way the price of a barrel of Oil is headed… and for now, that’s giving me a pretty good indicator of which way Mortgage Rates are headed too.
Bottom Line? Rates are low – if you are considering a Mortgage Refinance… don’t wait.
If you are considering a purchase, don’t wait. There are mortgage tax credit’s still available for First Time Home Buyers, and Home Buying Grants available to folks who have already owned a home! So, very low down payment for a house (in some cases you need less than $500 to buy a house), and easy qualifying. The prices of homes are not getting cheaper. The cost of Renting IS!
We are nerds. We like Economic data, and we thrive on looking at nerdy reports and watching nerdy shows about Economics. You don’t have to be a nerd to get the best mortgage rates. Call Steve and Eleanor Thorne, 919 649 5058 Mortgage Rate Specialist in North Carolina!