FHA Mortgage Rates (Nov 21)

FHA Mortgage Recommendation: 30 year fixed rates are already pretty attractive right now, and it’s appearing that they might go even lower. Over the past 16 years I have help individuals understand the difference between the 10 year note and mortgage bonds.

Just two days ago the 10 Year Note had risen by 285 basis points… while Mortgage Bonds rose 12 basis points. I’m sure you are saying to yourself what does this mean for me?

Let me help you understand, but first let me explain what happened. The Fed minutes from the October Fed meeting was released. The minutes basically expressed some concerns over the health of the economy. Their future predictions or targets for employment and growth were lowered.

After many years of being concerned with inflation… Now the feds are concerned about deflation. This news has shocked the financial markets, which pushed Stocks lower and directed money flow into an ultra Safe treasury note.

Deflation is when prices drop, due to increases in money supply and credit. And we are definitely seeing problems with credit right now… and with the economy slowing, we are hearing some people say we are in a deflationary recession.

In a deflationary environment, investors flee into fixed instruments like bonds because the fixed payment received would actually buy them more goods and services over time.

If you can recall, back in the Spring of 2003, Alan Greenspan mentioned a deflationary recession and mortgage bonds rallied 400 basis points in a couple of weeks, which sparked a refinance boom.

But things are much different right now, but stay tuned, should more investors wake up to the value of Mortgage Bonds, we could see an improvement in FHA mortgage rates.

So get ready now, all refinance booms have a limited timeframe. And this time will certainly be more challenging as there are fewer programs with stricter guidelines, but can you guess what the biggest hurdle of all is going to be? You guessed it, property values.

Please keep in mind that with the new government stimulus package combined with several other solutions, we can help most people refinance even if they owe more than what their property is currently worth.

Mortgage Bond prices have barely peaked above the 200 day moving average. We will continue to float our FHA mortgage rates, but be mindful that things can change quickly. And a reminder about 2003, when Alan Greenspan can back later and said there is no threat to deflation, the refi boom quickly ended and rates shot up dramatically higher.

Stay tuned we are living history.

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.

FHA Mortgage Rates (Nov 18)

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.

Tuesday’s bond market has opened in positive territory again, despite early stock gains.  The stock markets are rebounding from yesterday’s 223 point loss in the Dow with fairly strong gains during morning trading.  The Dow is currently up 181 points while the Nasdaq has gained 11 points.  The bond market is currently up 9/32, which will likely improve this morning’s FHA mortgage rates by approximately .125 of a discount point.

The Labor Department gave us the first of the week’s two key inflation readings.  They reported that the PPI fell a whopping 2.8% that was a much larger drop than analysts had forecasted.  However, the more important core data reading that excludes more volatile food and energy prices rose 0.4% when analysts were expecting to see a 0.1% rise.  This means that prices for non food and energy costs rose more than expected, which is considered bad news for bonds and FHA mortgage rates.

Today’s markets are being boosted by favorable comments by Treasury Secretary Paulson that the Fed bailout program was making progress.  Many lawmakers had questioned the usage of the money for the program but market participants liked what they heard, helping to fuel this morning’s buying in stocks and bonds.

Tomorrow’s only data is October’s Housing Starts. This data gives us an indication of housing sector strength, but usually does not have a noticeably impact on mortgage rates. I don’t expect this month’s version to be any different unless it varies greatly from analysts forecast. It is expected to show a decline in starts of new homes.

Tomorrow afternoon brings us the release of the minutes to the last FOMC meeting. 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 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.

FHA Mortgage Rates (Nov 13)

Daily FHA Mortgage Rates Recommendation: If I were closing on an FHA Home Loan anytime within the next 20 days I would lock in my FHA Mortgage rate.

Thursday’s bond market has opened in negative territory, erasing part of yesterday’s late rally that came as a result of strong stock losses.  The stock markets have opened in negative ground, continuing yesterday’s selling.  The Dow is currently down 90 points while the Nasdaq has lost 27 points.  The bond market is currently down 4/32, but we will still likely see a small improvement in this morning’s FHA mortgage rates of approximately .125 of a discount point due to strength in bonds late yesterday.

This morning’s first piece of news was the release of September’s Goods and Services Trade Balance report. It gave us the size of the U.S. Trade Deficit, showing a $56.5 billion deficit.  That was a little smaller than forecasts of $57.0 billion, but this data is not considered to be of high importance to the markets and has had little impact on this morning’s trading or FHA mortgage pricing.

The other news released this morning was weekly unemployment figures from the Labor Department.  They reported that new claims for benefits jumped to 516,000 last week, exceeding forecasts of 479,000.  The previous week’s figures were revised to 484,000, meaning analysts were expecting to see a small decline in claims when we actually saw a sizable jump.  While this data is not considered to be of high importance because it tracks only a week’s worth of filings, it can influence trading and rates when it varies from forecasts such as today’s variance.

There are two reports scheduled for release tomorrow morning with one of them considered to be very important to the markets. October’s Retail Sales report is the first and the highly important one because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. If this report reveals weaker than expected sales, the bond market should thrive and FHA mortgage rates will fall. Current forecasts are calling for a drop in sales of approximately 2.1%.

The second report comes late tomorrow morning when November’s preliminary reading of the University of Michigan’s Index of Consumer Sentiment will be released. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 57.0, down from October’s final reading of 57.6.

FHA Mortgage Rates (Nov. 12)

Daily FHA Mortgage Rates Recommendation: If I were closing on an FHA Home Loan anytime within the next 20 days I would float my FHA Mortgage Rate.

Wednesday’s bond market has opened in positive territory as investors shift funds from stocks into bonds.  This has pushed the stock indexes significantly lower again with the Dow down 312 points and the Nasdaq down 46 points.  The bond market is currently up 14/32, which should improve this morning’s FHA mortgage rates by approximately .125 – .250 of a discount point over Monday’s rates.  The bond market was closed yesterday in observance of the Veteran’s Day holiday.

There is no relevant data being released today, but we will get the results of today’s 10-year Treasury Note auction at 1:00 PM ET.  These results can influence bond trading enough to affect FHA mortgage rates this afternoon. If the sale was met with a strong demand from investors, bonds will likely rally and FHA mortgage rates should fall.

However, a lackluster interest could lead to weakness in bonds and higher FHA mortgage rates .

The first economic data of the week is September’s Goods and Services Trade Balance report Thursday morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong.

This is because the securities’ proceeds are worth more when sold and converted to the investor’s domestic currency. However, its results will not likely directly lead to changes in mortgage rates.

Overall, look for a fairly quiet week in the FHA mortgage market compared to previous weeks unless something totally unexpected transpires. The two Treasury auctions that are of the most interest are today’s and Thursday’s since they can impact mortgage rates the most. But there is only one important report being posted and that doesn’t come until Friday morning.

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