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  1. Shh! Don’t Disturb Record Low Mortgage Rates

    By on May 8, 2012

    It’s a pretty quiet day thus far without any European bombshells overnight and no economic reports scheduled for today.  Thus the day is setting up to be a calm day in the markets.  Mortgage-backed securities are trading slightly above yesterday’s closing level to begin the day, but not far enough to move current mortgage rates.

    The stock market today continues to focus on the European elections over the weekend in which incumbents and the current policies to deal with the fiscal crisis that plagues many countries are the big losers.  In Europe it seems as if the outgoing leaders tried to fight the crisis with spending cuts and revenue hikes but the people, who benefit from the spending and are injured by the revenue hikes, desire a different path.  Strikingly it appears in the US it appears that an opposite scenario is playing out—the people seem willing for reasonable spending cuts and revenue hikes, yet the leadership seems unwilling.

    The difference between the European and US situations however is stark.  In Europe, with a single currency but 19 member nations, change requires the almost impossible (even more so after the election of socialists in France) of obtaining unanimous consensus.  In the US, while it will take compromise, which has been nearly impossible to find heretofore, once a deal is made it instantly applies to all 50 states. For that reason different outcomes are likely.  The European Union will likely splinter and then disintegrate over the next few years, plunging much of Europe into a deep recession or worse.  In the US, I have confidence that cooler heads will prevail and a plan will be adopted that will lay the foundation for a slow improvement in the fiscal condition of the country.

    Tomorrow is another quiet day relative to economic reports so if you are in need of a mortgage for a refinance or purchase this is a great time to lock-in your rate.

    Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  2. Will Jobs Decline Have Similar Impact on Mortgage Rates?

    By on May 7, 2012

    Non-Farm Payroll report declines steadily

    Friday’s US Non-Farm Payrolls report showed clear and acclerating evidence that the recovery in the job market has slowed.  The chart above tracks the number of new jobs created in the US since January and paits an ominous picture.  Should the trend continue it is likely that the US could experience a net loss of jobs in the months upcoming.

    The report indicated that large companies were adding no jobs and medium and smaller employers wer being very conservative in their addition of employees.  The reasons cited by most economists are related to the uncertainties that plague our economy.  With 2012 being a presidential election year, with major tax and regulatory issues still unresolved, with political and economic turmoil in Europe, prudence dictates a cautious business strategy for most US companies.

    For mortgage rates, the weak NFP report probably locks-in very low, historic rates for an extended period.  Until jobs in the US begin to grow at a steady and accelerating pace, mortgage rates are likely to stay near all-time lows.

    Category: Compare Mortgage Rates, Current Mortgage Rates, General, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  3. European Left Turn, May Turn US Mortgage Rates Down

    By on May 7, 2012

    In European elections over the weekend voters sent a couple of very clear messages.  First, out with incumbents.  Second, in with more radical and fringe parties.  In France and Greece, socialist candidates dominated the elections.  In Germany and the UK, it was a reduction in the power of the ruling conservatives.  But across the board, voters made a leftward turn that has spooked the markets and will likely send US mortgage rates in a downward direction this week.

    When one of the leaders of the likely ruling coalition in Greece makes the following statement, it is no wonder why market analysts are concerned:  “If the politics of austerity continue, Europe is in big danger of breaking up. These policies are causing unhappiness, unemployment and poverty, as in the 1930s. Europe needs social solidarity and not to work according to market laws.”

    The blaming of austerity (budget cutting) for being the root cause of unemployment and poverty as opposed to massive government over-spending is beyond illogical.  Yes, severe budget cuts after decades of severe over-spending is causing exacerbation of the economic problems in Greek in the short-run, but the only way to extricate the nation from their current plight is through tough measures.  Perhaps some softening of the austerity measures can take place, but if Greece expects others in Europe to continue to provide bailout funds, then only slight softening may be possible.

    France’s new socialist President, Francois Hollande campaigned against the bailout deals negotiated by his predecessor Nicolas Sarkozy with German President Angela Merkel, yet his policy demands are thought to be unclear at this time.  Regardless, it is likely that further Agreements between the two dominant countries in Europe regarding the future of the Eurozone and support for its struggling members will be difficult to achieve.

    This week is rather slow for economic data in the US.  Thursday and Friday will provide the best data with weekly jobless claims and inflation data.  The early part of the week will likely see a reaction to the weak jobs report from last week and the European elections.  Overall, it is likely to be a great week to lock-in a mortgage rate for a refinance or purchase of a home in the history of the United States!

    Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  4. Workforce Dropouts Push Mortgage Rates to Record Lows

    By on May 4, 2012

    Work Force Dropout Accelerating

    The labor force participation rate was nnounced earlier today and its drop is a disastrous sign for the US economy.  While the US unemployment rate actually dropped, the reason for the slide was the number of workers who gave up trying to find work and were therefore excluded from the ranks of the unemployed.

    The labor force participation rate has dropped to the lowest level since 1981.  The problem is that there are fewer people earning a paycheck and fewer dollars to be spent by consumers.  With 70% of US economic growth coming from retail consumer spending, the relative drop in earned income is a very negative sign for the economy.

    Mortgage rates drop on signs of economic weakness and that is certainly what has occured today.  New record lows have been reached for the benchmark 30 Year Fixed-rate mortgage loan today.  Until some signs of economic strength are visible, we will likely stay in record territory.

    Category: Compare Mortgage Rates, Current Mortgage Rates, General, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase

  5. Mortgage Rates Making History Following Disastrous Jobs Report

    By on May 4, 2012

    My headline may be stronger than most this morning but for good reason.  The monthly Non-Farm Payrolls report that was released earlier provided an up close look at a disaster happening before our eyes.  Yes, if you need a mortgage today will be the best day to lock a loan in the history of the United States for a purchase or refinance.  However, the bad economic news that the record low rates are based on is horrible news for most Americans.

    The headline number of the NFP report is bad enough—115,000 new jobs when the weak forecast was for 170,000.  But the most significant number is the drop in the unemployment rate by .1% to 8.1%.  Yes you heard me correctly–the drop in unemployment is a horrible disaster.  Why? The reason is quite simple.  The unemployment rate dropped despite fewer jobs being created than the number of people entering the workforce.  How does this happen?  It happened because 169,000 people were removed from the labor-force because they were deemed to no longer be making any attempt to find work!  This same disturbing process has been going on in the US for months.  Economists estimate that if all the non-retirement age workers who were removed from the labor-force due to lack of job-finding effort were added back the result would be an unemployment rate of 10.9%! The labor-force participation rate (percentage of eligible workers in the workforce) has dropped to its lowest level since 1981.

    Current mortgage rates are in new record territory today and are not going any higher until something happens to convince mortgage-backed securities traders that a fundamental change has occurred in the trajectory of the US economy.  Barring bold leadership from Washington, which is oxymoronic to be sure, mortgage rates may continue to set new records for through the summer.

    Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  6. Services Sector Falls, Will Mortgage Rates?

    By on May 3, 2012

    Service Sector Growth

    A familiar pattern is visible in today’s chart of the Institute of Supply Management’s Monthly Non-Manufacturing Index.  This index that depicts the relative strength of the services sector of the US economy saw a peak in early 2012 and a drop-off in April.  We have seen this same patern in other key economic data as well (GDP in particular) that suggests the US economy has hit the brakes.

    Services represent approximately 80% of the US economy, so any negative movement is an ominous sign for the future.  Perhaps this is a one month aberration, but I suspect it is part of a new trend.

    For mortgage rates the news is good.  Weakness in the econmy is a positive for low rates.  Rates have moved back to near all-time records and show no sign of moving higher until the economy picks up steam.

    Category: Compare Mortgage Rates, Current Mortgage Rates, General, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  7. Mortgage Rates Stay Put on Abstract Data

    By on May 3, 2012

    Wow, the economic data in the US is so confusing it would make calculus seem clear to a kindergartener! Every day it seems we get data that conflicts with other data, painting a picture that can only be described as—abstract.  I do not mean abstract art…simply abstract.  Today’s confusion lies in weekly jobless claims that suddenly drop by 27,000 for no apparent reason, the biggest drop in a year.  Add to that seemingly good news a very weak result in the report of US productivity and the state of the services sector, and you get one big, hairy mess.  Mortgage-backed securities, the bonds upon which current mortgage rates are set, have traded higher, lower and nowhere since they opened for trading at 8:00 AM.

    What gives you may ask?  The simple truth is that the US economy has slowed substantially to the point where it is sputtering like a car running out of gas.  It may surge at times, but mostly it is slowing down and preparing to stop.  To take the analogy even further: What happens when you run out of gas while trying to climb a hill?  That is the situation we find ourselves in at the moment.  We are trying to climb up a hill toward long-term economic stability and don’t like what we see in front of us—missing track.

    As it relates to the weekly jobless claims number, I learned something yesterday that is puzzling and concerning.  In every report for over a year, the Department of Labor’s Weekly Jobless Claims have revised the previous week’s claims numbers higher.  This makes no sense at all, given we have been through periods of up-trends and down-trends during this period.  It appears that the reports may be being manipulated to always put the best light possible on the current week’s data.  If this is true, it is ridiculous and petty, but hardly surprising.

    Today also gave us week productivity and service sector data.  Of the two the weakness in the services sector is a cause for alarm.  Services represent about 80% of the US economy so a slowdown in that sector is a very negative sign for the future.

    We’ll see what tomorrow brings with the all-important Non-Farm Payrolls report—I bet it will be abstract!

    Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  8. Employment Change Drop Helps Mortgage Rates

    By on May 2, 2012

    Smaller Companies Account for Most Job Growth

    Employment Change according to ADP has declined substantially in the past month.  But more interesting than even the drop by 80,000 jobs since March is the fact that the jobs that were created were so heavily concentrated in small and mid-sized companies.

    For policy-makers and economists the challenge is clear: to get large US companies to begin to hire additional workers.  What explains large firms unwillingness to hire additional workers.  It clearly is uncertainty.

    Large firms are worried about unresolved regulatory issues, tax policy that is not set beyond year end, government spending that will surely decline–but by how much, and economic turmoil in Europe.  Until we get some resolution to these issues, the US fiscal ones in particular, large companies in the US will refrain from adding workers.

    The impact on mortgage rates should be to keep rates near all-time lows.

    Category: Compare Mortgage Rates, Current Mortgage Rates, General, Housing Market, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  9. Mortgage Rates: This One’s Going to Leave a Mark

    By on May 2, 2012

    Today’s ADP Employment Change report that provides a preliminary look at the jobs picture two days before the monthly Non-Farm Payrolls report is going to leave a mark on current mortgage rates.  Economic data have been all over the place lately—some positive, some negative, some flat.  The general consensus among economists and analysts has been that the US economy is in a slow patch but growth continues.  Today that assessment is in question as the ADP report came in much weaker than even the lowest forecaster predicted.  Mortgage-backed securities have reacted accordingly and their mortgage rate derivatives have dropped.

    According to ADP only 119,000 new, private sector jobs were created in April, well below the 170,000 forecasted and below the 200,000 level needed to simply replace jobs that were lost.  Adding insult to injury, last month’s figures were adjusted downward from 209,000 to 201,000.  Jobs in construction and manufacturing, which had been showing steady progress for the past six months both saw drops of 5,000 in April.

    Analysts have provided two explanations for the weakness: the weather and the fact that the report measures activity in the past as opposed to the future.  Speaking of weak…those are really weak arguments!  The fact is that the US economy, around the start of 2012 began to hit the brakes hard.  Uncertainty about the US fiscal situation, dramatic regulatory issues outstanding, the fact that it is an election year, the European debt crisis and China’s own slowdown have all made corporate America apprehensive to invest in new people.

    The Factory Orders report released at 10 AM this morning was expected to be very weak as well.  Analysts expected a 2.0% drop from last month’s gain of 1.3%.  The actual result was a drop of 1.5% which is close enough to expectations (and still negative) to not impact the markets.

    Tomorrow and Friday will both deliver additional employment data.  Hold on…it could be a bumpy ride!

    Category: Compare Mortgage Rates, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  10. Manufacturing Grows, Mortgage Rates Inch Higher

    By on May 1, 2012

    ISM Manufacturing Index Change Last 12 Months

    The Institute for Supply Management’s monthly Manufacturing Index is one of the more closely watched reports of US economic data.  The Index measures the level of manufacturing activity nationwide.  The chart above depicts the results of the survey over the past twelve months and indicates a positive change month to month with a green bar top and a negative month to month change with a red bar top.

    The result of the ISM Manfaturing Index over the past year follow the general choppy pattern we see in many economic indicators over that period.  However clearly visible is a general improving trend beginning in October of 2011. The current reading of 54.8 is the highest since June of 2011.

    For mortgage rates, increasing manufacturing activity and other improving economic data would tend to support higher levels.  Yet, while this particular measure is positive other measures have been negative.  We appear to be in a prolonged period of muddled economic activity.  In such cases mortgage rates tend to hold firm near current levels.

    Category: Compare Mortgage Rates, Current Mortgage Rates, General, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

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