Mortgage rates enjoyed another strong day, falling to the best levels in exactly 2 weeks. Rates were actually set to move higher early this morning, but a much weaker-than-expected reading on Q2 GDP helped drive demand for bonds. Better buying pushes bond prices higher and rates lower. The strength in bond markets gave lenders the peace of mind needed in order to offer even better terms than yesterday. The most prevalent conventional 30yr fixed rate is quickly returning to 3.375% on top tier scenarios.
Next week brings important economic data, including the big jobs report on Friday. The overall tone of that data should help determine whether rates will continue building on the past 2 days of positive momentum. The conservative approach would be to lock in the gains with rates at 2-week lows. The aggressive approach would be to wait until we have clear evidence AGAINST the possibility that a new trend toward lower rates has begun. As of today, there is no such evidence, but it could come at any time.
The Fed meeting
The Fed has a little pep in their step. They like what they see when they look at the U.S. economy right now. They see less unemployment and more economic activity (stuff being made and services being provided). They were happy to see June’s strong employment number after the bummer we saw in May. And they see inflation (rising prices) as being unusually low. (This is big – because low price growth generally means low interest rates).
Remember – the Fed’s job is to try to balance inflation (not too much or too little) and job growth (more is better). In this paragraph, they tell us they aren’t worried about inflation and they think more jobs will be created in the near future. In other words, they are getting close to their happy place.
Given that the Fed is near their happy place, and given that they still would like to see a bit more inflation and more job growth, they kept their foot on the accelerator (kept short term rates super low). The Fed Funds Rate (the rate at which banks can borrow from each other) remains at 0.50%. Mortgage rates went down a little bit on the news. That makes puts us in our happy place.
The Fed owns more than a trillion dollars of mortgage bonds. Those bonds pay interest and principal every month. The Fed is reinvesting the principal repayments they get back into mortgage bonds. That keeps mortgage bond prices higher than they normally would be which keeps mortgage rates lower than they normally would be (in Fed-speak, they call this “maintaining accommodative financial conditions.”) Thanks Fed!
Refinancing or buying a home doesn’t have to be Stressfull
With rates so low many have refinanced at least once, even twice. But there are still many who have not, due to either not wanting to deal with the stress of gathering documents and not sure of qualifying for a loan. At North Atlantic you receive attentive personalized service
(see what our clients say).
Beleive me, it’s a great deal easier with our help and expertise.
The average time to close a loan is about 30 days. We monitor real time interest rates, which is why our clients are able to access some of the lowest rates available. We understand the guidelines and know what different lenders can do, which incresaes your opportunites for a fast easy loan with a great rate.
Don’t put it off any longer and start saving with a lower mortgage payment. There are no salesman to speak with only qualified mortgage experts.
For a free consultation,
Call or Email:
John Sauro
Ph: 877-794-5363
Email: JohnSauro@Gmail.com
Sources: MBA, CNBC, Bloomberg