Mortgage Rates and Economic “Data Fairly ‘Level'”by Tim Manni
According to the latest issue of HSH’s Market Trends Newsletter, mortgage rates haven’t fluctuated substantially because of the economy’s inconsistent outlook. “As has been the case over the past few weeks, mortgage rates appear poised to rise on the back of firming economic data, only to have the pressure let out of them by a less-stellar outlook. That’s generally left [mortgage rates] at about the same levels now since early July.”
“[Last] week was no exception. A fair rise in Treasury yields at the end of the week [8-7-09] left us with the impression that we’d see a bit of an upward bias to rates [last] week, at least more than the one basis point tick in HSH’s Fixed-Rate Mortgage Indicator. The FRMI nudged just that lone basis point higher to close [last] week at 5.73%, an average barely any different than those seen since Independence Day passed. The FRMI’s counterpart for hybrid 5/1 ARMs lost six basis points, landing at an average 5.04%. Conforming 30-year FRMs started the week at 5.51% on Monday, but ended it at 5.35% on Friday, still well within the mid-portion of a broad range defined back in late May and early June.”
“We expected rates to move higher [last] week. They didn’t. Signals [last] week point to somewhat lower rates [this] week, but the pattern is an untrustworthy one at the moment. [This] week should start on a subdued note, but there is a lot of data which could firm things right back up again. These include looks at Homebuilder Sentiment, Housing Starts and existing home sales, a couple of localized manufacturing surveys and the latest bank loan officer opinion survey. More likely than not, it’ll tend to be a self-canceling bunch of data, but after a pessimistic kind of week flattened rates again [last] week (starting high and ending low), we’d bet the other direction is likely — we’ll start low and end higher, and “leveling” should continue, more or less.
Click here to continue reading “Rates, Data Fairly ‘Level’.” HSH’s free weekly Market Trends Newsletter, an in-depth analysis of various financial markets of the week prior, is published every Monday. Email subscribers receive it in your inbox by Friday night, so sign up today! Also, be sure to check in with our Market Trends blog for all news relating to any weekly shift in mortgage rates.