FHA Mortgage Rates (Nov 19)

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

Wednesday’s bond market has opened in positive territory following favorable results from today’s CPI release. The stock markets are showing another round of early losses with the Dow down 150 points and the Nasdaq down 40 points.  The bond market is currently up 17/32, which will likely improve this morning’s FHA mortgage rates by approximately .250 of a discount point.

The Labor Department gave us today’s big news with the release of October’s Consumer Price Index (CPI).  They reported that the overall reading fell 1.0% last month while the core data fell 0.1%.  Both of these readings were below forecasts, indicating that inflationary pressures at the consumer level of the economy were not as bad as many had thought.  This is very good news for bonds and FHA mortgage rates.

October’s Housing Starts was also posted this morning, showing a stronger level of new starts than what forecasts were calling for.  That could be considered bad news for the bond market and FHA mortgage pricing, but this data is not considered to be of high importance to the markets therefore has had little impact on today’s pricing.

The minutes to the last FOMC meeting will be released at 2:00 PM ET. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed’s next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and FHA mortgage rates higher tomorrow afternoon. However, if they indicate a likelihood of another rate cut in the coming months, we should see the bond market rise and FHA mortgage rates drop during afternoon trading.

Tomorrow brings us the release of weekly unemployment figures and October’s Leading Economic Indicators (LEI).  The Labor Department will post weekly unemployment claims but unless it varies greatly from the 503,000 that is expected, I don’t believe this data will affect tomorrow’s FHA mortgage pricing.

The LEI will be posted by the Conference Board at 10:00 AM ET and is expected to show a decline of 0.6%.  This means that the report is predicting economic activity to slow relatively quickly in the next three to six months.  That would be good news for bonds because a slowing or weakening economy generally speaking makes bonds more attractive to investors and usually leads to lower FHA mortgage rates.

* 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.

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.