Friday June 17th, 2011 6:11 pm ET
By John Sauro
Mortgage Rates End where they Started in Choppy Bond Trading
The volatility continued this week, mostly due to the problems in the Eurozone.
The Fannie Mae 4.00% Coupon closed the week at $100.65, which is pretty much where it started the week. You have reason to celebrate if you locked into a rate back on June 11th. Don’t worry, it appears that the volatility will continue in the Bond and Stock Markets, which means there may be opportunities for the low rates to be revisited.
For you newcomers, it’s important to understand that Mortgage Rates are controlled by the Fannie Mae Bonds, not the 10 year note, as many misguided individuals will lead you to believe. When investors buy Fannie Mae Bonds, they drive up the price of the Bond, hence, moving the Bonds interest rate and Mortgage Rates lower and vice versa.
This is important information to have if you are going to try to time the interest rate market. But don’t try to do it without a professional to help you. I watch the bond Market all day and this helps me advise my clients when to lock or when not to lock into an interest rate.
Some will call companies to check rates without know what are the right questions to ask and then think they will be able to lock into a rate the moment they here of one they like. In fact, you may not be able to lock into a rate if your paperwork isn’t in.
So, its best to get the process started by getting your applications and required documents in. Then you can lock in with a phone call or an email. This enables us to monitor the market and notify you of a great rate that you can lock into, If you are a Home Also, if you are Home Buyer, Get Pre Approved. Doing so is a great negotiating tool.
Economic News
Housing Starts and Building Permits were both higher than expectations. Housing Starts rose 3.5% in May to 560,000 on an annualized basis, above the 540,000 that was expected. Building Permits, a sign of future construction, jumped nearly 9% to 612,000, well above the 548,000 that was anticipated, the highest level this year. These numbers were a reason to be a bit more optimistic about housing.
Initial Jobless claims fell 16,000 in the latest week to 414,000 but… they remain above that psychological level of 400,000. Continuing Jobless Claims fell 21,000 to 3.68 Million. This is the tenth straight week that Jobless Claims have remained back above the 400,000 level.
The Dow and S&P ended higher amid thin, choppy trading Friday to snap a six-week losing streak, helped by news a bailout for Greece may be near. But declines in the tech sector weighed on the Nasdaq.
Nearly Half of Americans Think New Recession Is Coming: Poll
Bernanke Says Failure to Raise Debt Ceiling Could Result in Severe Market Disruption
Job Creation = Home Price Appreciation