Daily FHA Mortgage Rates (Oct. 30)

Daily FHA Mortgage Rates Recommendation: If I were closing on an FHA Home Loan anytime within the next 60 days I would float my FHA Mortgage Rate.

Thursday’s bond market has opened in negative territory following the release of a stronger than expected GDP reading and early stock gains.  The Dow has risen 132 points while the Nasdaq has gained 30 points.  The bond market is currently down 17/32, which will likely push this morning’s FHA mortgage rates higher by approximately .375 of a discount point.

This morning’s big news was the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP). The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S.  It revealed a decline of 0.3%, its worst reading in seven years.  It also was only the fifth time in 17 years that the quarterly GDP has fallen.  However, analysts were expecting to see a 0.5% decline, therefore, the numbers weren’t as bad as expected.  Also contributing to this morning’s losses was a key inflation reading in the data that showed a larger than expected increase.  This raised some inflation concerns and contributed to the weak opening in bonds.

The Labor Department posted weekly unemployment figures this morning, saying that 479,000 new claims were filed last week.  This was nearly unchanged from the previous week, but was slightly higher than forecasts.  However, there is no comparison between the importance of this data and the GDP.  With the GDP being considered a very highly important report, the markets ignored the weekly claims figures.

There are three reports scheduled for release tomorrow. The first is the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.7%. A smaller than expected increase would be good news for bonds and FHA mortgage rates.

September’s Personal Income and Outlays report will also be posted early tomorrow. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility.

This is bad news for the bond market and FHA mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see an increase of 0.1% in income and decline in outlays of 0.2%.

The week’s last report comes at 10:00 AM ET tomorrow when the University of Michigan updates their Index of Consumer Sentiment for this month. Current forecasts show this index remaining nearly unchanged from this month’s preliminary reading of 57.5. This index is important because it helps us measure consumer confidence, which is believed to indicate consumers’ willingness to spend. Since consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be important.

FHA Mortgage Rates (Oct. 17th)

I would lock my FHA Mortgage Rate if my closing was taking place within 7 days. This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Today’s bond market opened relatively flat compared to recent trading sessions despite favorable economic news. The stock markets are up slightly with the Dow up 11 points and the NASDAQ up 6 points. The bond market is currently up 4/32, which will likely keep this morning’s FHA mortgage rates steady.

There were two economic report posted this morning, with both of them giving us weaker than expected results. September’s Housing Starts came in at a 17-year low, further supporting the theory that the housing sector is far from a recovery. The 6.3% drop in new starts was a much larger decline than analysts had forecasted. This is good news for bonds, but since the data is not considered to be of high importance, it has had a minimal impact on mortgage rates.

The second report of the day and the last of the week was October’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment. It showed a reading of 57.5, which was well off from forecasts of a 65.0 reading. This means that consumers were much less optimistic about their own financial situations than many had thought. That is also good news for mortgage rates because waning confidence usually means consumers spend less, which in turn slows economic activity and eases inflation concerns.

Next week is very light in terms of economic releases scheduled to be posted. Monday does bring us one of the week’s few reports with the posting of September’s Leading Economic Indicators (LEI) that attempts to predict economic activity over the next three to six months. It is a moderately important report and may cause a slight change in mortgage rates.

Look for more details on next week’s events in Sunday’s weekly preview.

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