Some Fed members are speaking as well and the market is always listening for good or bad updates from Europe.

Economic Calendar for Week of January 9, 2012

• Monday - Consumer Credit
• Tuesday - Wholesale Trade
• Wednesday - EIA Petroleum Status Report, Beige Book
• Thursday - Jobless Claims, Retail Sales, Treasury Budget
• Friday - International Trade, Consumer Sentiment, Import & Export Prices

Should I Lock Now or Wait?

Since mortgage rates are very close to their all time historical lows, there is likely much more to gain by locking now then by waiting. It only takes one piece of news to push rates up and when they move up, they move much faster than they move down. That being said, the market may have changed by the time you’ve read this, so calling us is the most sure way to get the most up to the date guidance in whether locking makes sense for you and what loan program best fits your needs.

The Federal Open Market Committee (FOMC) Meets

The Federal Open Market Committee (FOMC) met this week and as expected, they left key short term interest rates alone. The Fed Funds Rate (the rate at which banks lend money to each other) is still at 0.000% to 0.250%. The committee has said it believes the economy is growing moderately and that employment will continue to improve, albeit at a slower than desirable pace.

The FOMC also indicated that there are some areas of concern that might affect the US Economy moving forward such as slowing in global growth and concerns in business investment.

Mortgage Rates Moving Forward

Will rates be higher or lower next week? The truth is that nobody knows. We do know that since we are at all time historic lows, there is limited upside in waiting for rates to improve. On the other hand, there is substantial risk that rates will move higher if you wait.

Should you lock now? What is the best program for your needs? We can answer these questions and more with a free consultation where we can put together a strategy to that best fits your unique needs.

Putting Mortgage Rates Into Perspective

Since it is quite easy to hear how low mortgage rates are but not understand how low they are in a historical context, we have been hard at work creating some charts that we will be releasing in the coming weeks documenting the history of mortgage rates. Sometimes it take a chart to truly understand how low and historic the mortgage market we are in is.

Economic Calendar for Week of December 12, 2011

• Monday - Treasury Budget
• Tuesday - Retail Sales, Business Inventories, FOMC Meeting Announcement
• Wednesday - Import and Export Prices
• Thursday - Jobless Claims, Producer Price Index, Industrial Production, Philadelphia Fed Survey

Mortgage Rates and the Best Program For Your Needs

We commonly speak with homeowners that are confused about which program is best for them or what size loan they qualify for. We also find that many are confused about rate locks and when and if they should lock in their mortgage rate.

If you need a free professional consultation to put together a mortgage strategy that fits your needs the best, we can help. Now is a critical time to learn about your options if you are on the fence or unsure about what move, if any, you should make in regards to refinancing your existing or locking in a rate for a new mortgage. Mortgage rates are at historical all time lows, don’t miss the opportunity to take advantage of this unique market!

Mortgage rates have the potential to improve if the concern gains momentum or any new revelations showing the solution is flawed come to light. In such a scenario, the Wall St. equities will likely take a hit, while bonds see an influx of money, which would help push mortgage rates lower. That being said, rates are still close to all time historical lows.

The Week Ahead in Mortgages

Volatility is expected this week with mortgage rates as the Fed meets on Tuesday. Employment data will also be a key player this week as the ADP Employment Report is released on Wednesday, Jobless Claims on Thursday and the Employment Situation Report is released on Friday.

Economic Calendar for Week of October 31, 2011

• Monday - n/a
  
• Tuesday -  *FOMC (FED) Meeting Begins, ISM Manufacturing Index
• Wednesday - *FOMC Meeting Announcement, FED Chairman Press Conference, ADP Employment Report
• Thursday - Jobless Claims, Factory Orders
• Friday - Employment Situation

The minutes didn’t drop any bombshells that have had any significant immediate impact on mortgage rates, but did provide useful insight on how the Fed will be adjusting its activities, which will affect how mortgage rates move in the future. The market and mortgage rates as a whole were largely unmoved release of the minutes.

The Fed overview on the current state of the market shows that recovery has been slower than expected and that housing prices remain depressed, both factors holding back the overall recovery of the economy.

From the June 2011 FOMC Minutes:

Activity in the housing market remained depressed, as both weak demand and the sizable inventory of foreclosed or distressed properties continued to hold back new construction. Starts and permits of new single-family homes were essentially unchanged in April and May, and they stayed near the very low levels seen since the middle of last year. Sales of new and existing homes remained at subdued levels in recent months, while measures of home prices fell further.

Since the Fed sets monetary policy and participates in other activities such as buying Treasury debt, their activities can significantly impact the mortgage rates and the economy as a whole. As the Fed has implemented various policies to help push the economy out of recession, maintaining these policies for an extended period of time can do more damage than good. The June minutes provided some insight into how the Fed will unwind or exit some of these policies moving forward.

Fed Exit Strategy Principles

1. The Fed will raise the Fed Funds Rate (the rate at which banks lend each other money overnight)
2. The Fed will stop buying Treasury Debt (they are currently reinvesting the proceeds on existing obligations)
3. The Fed will sell its holdings in mortgage-backed securities

Since rates are currently at very low levels, there is a lot more room for rates to go up then go down. That means that now is a great time to inquire about whether your existing mortgage is the best fit for you or to learn about your options if you are considering purchasing a home.

As the Real Estate and financial markets continue to move up and down, mortgage rates can also be affected. Since mortgage rates are more closely tied to the bond markets, an up or down move in the stock market may not have the result in mortgage rates that one might expects. In fact, many times the resulting mortgage rate changes are counter-intuitive.

More importantly, rates change daily and they can change quickly. Some mortgage professionals have recently noted that their rate quotes have only had shelf lives of three to four hours before market changes have deemed them inaccurate.

How does a consumer navigate fast changing markets in order to refinance their existing loan or purchase a home with the most favorable terms possible?

1. Plan – Define your needs ahead of time, do not wait until the last minute. This is especially true of home purchases.
2. Consult – Talk to your mortgage professional on a regular basis so they can interpret recent market events to you and communicate how those events can affect you.
3. Execute – When you have defined your needs and have determined that now is the best time to move forward, don’t shop yourself out of a good loan! What does this mean? It is easy to get caught up in shopping for the best rate, but it is not uncommon for home owners to miss locking their loan at a great rate because they are in search of better rates that do not exist or that they do not qualify for. It is important to shop to insure you are getting the best rate possible, but set limits to the number of companies you are going to consider doing business with and be careful of having your credit report needlessly and more times than is necessary!