Susan Deierling, Assoc. Broker
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Realty Executives Northern Arizona
Tag Archives: Freddie Mac
A quiet past week in economic news caused mortgage rates to worsen slightly.
This week, however, will be packed with economic reports which may have an impact on interest rates going forward.
Freddie Mac reported that the average rate for a 30-year fixed rate mortgage rose by 3 basis points from 3.53 percent to 3.56 percent with borrowers paying 0.8 in discount points and all of their closing costs.
The average rate for a 15-year fixed rate mortgage was unchanged from last week at 2.77 percent with borrowers paying 0.8 in discount points and all of their closing costs.
In other economic news, the Consumer Price Index (CPI) for January fell slightly to 0.0 percent as compared to Wall Street expectations of 0.1 percent and December’s reading of 0.1 percent.
The Core CPI, which measures consumer prices exclusive of volatile food and energy sectors, was 0.3 percent for January and surpassed analyst expectations of 0.2 percent and December’s reading of 0.1 percent.
Inflation Remains Low
These readings remain well below the 2.5 percent inflation level cited by the Fed as cause for concern.
According to the Department of Commerce, Housing Starts for January fell to 890,000 from December’s 954,000 and below Wall Street projections of 910,000.
These seasonally adjusted and annualized numbers are obtained from a sample of 844 builders selected from 17,000 newly permitted building sites.
Falling construction rates could further affect low supplies of homes reported in some areas; as demand for homes increase, home prices and mortgage rates can be expected to rise.
Full Economic Calendar This Week
This week’s economic news schedule is full; Treasury auctions are scheduled for Monday, Tuesday and Wednesday. New Home Sales will be released Tuesday.
Fed Chairman Ben Bernanke is set to testify before Congress on Tuesday and Wednesday.
Wednesday’s news includes the Pending Home Sales Index and Durable Orders.
Thursday’s news includes the preliminary GDP report for Q4 2012, the Chicago Purchasing Managers Index, and weekly jobless claims.
Friday brings Personal Income and Core Personal Expenditures (CPE).
Consumer Sentiment, the ISM Index and Construction Spending round out the week’s economic news.
Mortgage rates rose last week nationwide during a week of sparse economic news.
Thursday’s weekly jobless claims report showed 371,000 new claims, which was 1,000 fewer jobless claims than for the prior week. Wall Street expectations of 365,000 new jobless claims turned out to be too optimistic.
The semi-quarterly statement released Thursday by the European Central Bank (ECB) announced that the region’s inflation remains below its 2 percent ceiling as established by central banker. Economic weakness in the Eurozone is expected to persist into 2013 with signs of recovery becoming evident toward the end of this year.
ECB cited financial and structural reforms as essential to economic recovery, and noted that national governments within the Eurozone have been slow to implement such reforms. Without such reforms, Euro-area economies may continue to struggle, which would likely lead investors to seek a safe haven in the bond market, moving bond prices higher.
As bond prices rise, mortgage rates in Sedona and nationwide typically fall.
Also last week, Freddie Mac’s Primary Mortgage Market Survey reported the average rate for a 30-year fixed rate mortgage rising from 3.34 percent to 3.40 percent for buyers paying 0.7 percent in discount points plus closing costs. The average rate for a 15-year fixed rate mortgage rose from 2.64 percent to 2.66 percent.
Required discount points for the 15-year fixed rate mortgage rose from 0.6 to 0.7 percent.
Import prices for December released Friday were reported at -0.1 percent, below the consensus estimate of +0.1 percent. This report measures the prices of goods purchased in the U.S, but produced abroad and is considered an important indicator of inflationary trends affecting internationally produced goods.
Inflation tends to harm mortgage rates.
Next week’s economic calendar is full of economic data and includes the release of the Producers Price Index (PPI), Retail Sales figures, the Consumer Price Index (CPI). The Fed is also set to issue its Beige Book report, and the NAHB Housing Market Index and Consumer Sentiment report will be released.
Mortgage rates remain low, but are rising.
Mortgage bonds worsened last week as Fiscal Cliff talks moved closer to resolution and as the U.S. economy showed continued signs of growth.
Conforming mortgage rates in Arizona rose slightly, edging off the all-time lows late in November.
According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate conforming mortgage rate was 3.34% last week for home buyers and refinancing households willing to pay 0.7 discount points at closing plus a full set of closing costs.
Freddie Mac also showed the 15-year fixed rate mortgage averaging 2.67% with an accompanying 0.7 discount points plus closing costs.
1 discount point is equal to 1 percent of your loan size.
The two big stories that moved rates worse last week were the Fiscal Cliff talks and the November jobs report.
With respect to the Fiscal Cliff, mortgage rates worsened as Capitol Hill moved closer to a deal which would avoid the dual-event of expiring U.S. tax break and a mandated government spending rollback. These events are both scheduled to occur December 31, 2012.
Some analysts believe that these two events — in unison — could slow U.S. economic growth to the point of recession. Other analysts aren’t so sure. However, Wall Street is choosing to be cautious. This is why a break in talks has been good for mortgage rate shoppers of late; and why steps toward avoiding one or both scenarios has been bad for rate shoppers.
Mortgage rates often rise when economic growth is expected. This explains why November’s jobs report pushed mortgage rates worse Friday, too — Wall Street underestimated the Non-Farm Payrolls report which showed 146,000 net new jobs created, and didn’t expect to see the national Unemployment Rate drop to 7.7%.
This week, mortgage rates may rise again with new inflation data and a Retail Sales report set for release.
The big event, though, is the Federal Open Market Committee’s 2-day meeting scheduled, set to begin Tuesday. The FOMC is not expected to add new economic stimulus, but the Fed’s words can carry as much weight as its policies and actions.
The Fed will issue a statement to the markets at 12:30 PM ET Wednesday, and will host a press conference shortly thereafter. Mortgage rates are expected to remain volatile all week.
Low mortgage rates are pumping up home affordability.
Average 30-year fixed-rate mortgage rates made a new all-time low in November, continuing this year Refinance Boom and giving fuel to the budding housing market recovery.
At month-end, Freddie Mac’s survey of 125 banks nationwide put the benchmark product’s rate at 3.32% for borrowers willing to pay 0.8 discount points. This is just 0.01 percentage point above the record-low rate establishing prior to Thanksgiving.
The 15-year fixed mortgage is similarly low, posting 2.64 percent nationwide, on average. This, too, is only slightly higher the all-time low set the week prior.
Falling mortgage rates have helped to offset rising home prices in many U.S. cities.
Steady job creation and rising consumer confidence has swelled the pool of home buyers nationwide, causing home inventories to shrink and home prices to rise. The improving economy has also led to rising rents and now, within many housing markets, it’s less costly to buy and own a home than to rent a comparable one.
A $1,000 mortgage payment affords a $225,000 mortgage payment in Cornville.
Last week, the economy was shown to be improving.
- The Commerce Department showed that the Gross Domestic Product increased at a 2.7% annual rate in Q3 2012
- The Labor Department showed first-time unemployment filings dropping by 23,000 claims
- The Pending Home Sales Index jumped to its highest point since April 2010
- The Existing Home Sales report showed home sales up 2.1%
- The Case-Shiller Index showed home values making annual gains
In addition, Federal Reserve Ben Bernanke said that the central bank will take action to speed economic growth, should the U.S. economy start to side-step.
This week, there is little on the U.S. economic calendar, save for Friday’s Non-Farm Payrolls report. Wall Street is expecting to see 80,000 net new jobs created in November, and a rise in the national Unemployment Rate to 8.0%.
If the report’s actual results are stronger-than-expected, mortgage rates will likely climb from their all-time lows. If the report comes back weak, rates should stay unchanged.
Mortgage markets worsened last week as hope for a European economic rebound and stronger-than-expected U.S. economic data moved investors out of mortgage-backed bonds.
Mortgage rates all of types — conventional, FHA and VA — lost ground last week, harming home affordability in Cornville and reducing purchasing power nationwide.
Rising rates also thwarted would-be refinancing households hoping to time a market bottom.
The increase runs counter to Freddie Mac’s weekly Primary Mortgage Market Survey which showed the average 30-year fixed rate mortgage rate dropping 2 basis points to 3.37% nationwide.
This contradiction occurred because Freddie Mac’s weekly mortgage rate survey is conducted Monday through Wednesday, and because the majority of the surveyed banks reply to Freddie Mac on Tuesday. As a consequence, Freddie Mac failed to capture this week’s mid-week movement that took mortgage bonds to a one-month worst.
Access to Freddie Mac mortgage rates is for “prime” borrowers and requires payment of discount points plus closing costs.
This week, mortgage rates may rise again. There is a lot of news on which for Wall Street to trade, beginning with the week’s biggest story — the Federal Open Market Committee’s 2-day meeting scheduled for Tuesday and Wednesday.
At the FOMC’s last meeting, the Federal Reserve introduced a third round of qualitative easing (QE3), a program through which the Fed will work to keep mortgage rates low until the economy’s recovery is more complete.
The Fed is expected to announce no new stimulus in this, its seventh of eight scheduled meetings for 2012, however, mortgage rates are typically volatile in the hours after the FOMC adjourns.
New housing data is set for release this week, too.
Wednesday, the U.S. Census Bureau will release September’s tally of New Home Sales. Given the recent strength in Housing Starts and rising confidence among the nation’s home builders, New Home Sales may best analyst calls for 385,000 new home sold last month on a seasonally-adjusted, annualized basis.
Strength in housing has recently correlated with rising mortgage rates.
The housing market’s forward-looking Pending Home Sales Index is released Thursday.
Mortgage rates in Arizona continue to troll near all-time lows, boosting the purchasing power of home buyers statewide.
According to Freddie Mac’s most recent Primary Mortgage Market survey, the average 30-year fixed rate mortgage is now 3.39 percent nationwide, just three ticks off an all-time low. At the start of last quarter, 30-year fixed rate mortgage rates averaged 3.62 percent.
One year ago, they averaged 4.12%.
When mortgage rates are falling, they present Cornville home buyers with interesting options. Because of lower rates, buyers can choose to tighten their household budgets, buying an ideal home but paying less to own it each month. Or, for buyers who shop for homes by “monthly payment”, falling mortgage rates put more homes with affordability’s reach.
As a real-life example, for a buyer whose monthly principal + interest mortgage payment is limited to $1,000 per month, and whom opts for a 30-year fixed rate mortgage, as compared to January of this year, the maximum property purchase price has climbed 6.6%, or $14,000 in list price.
Consider this comparison:
- January 2012 : A payment of $1,000 afforded a maximum loan size of $211,756
- October 2012 : A payment of $1,000 affords a maximum loan size of $225,771
The 6.6 percent increase in affordability outpaces this year’s rise in home prices and is one reason why the U.S. housing market is improving. Slowly and steadily, the U.S. economy is improving and “good deals” in housing are becoming harder to find. In addition, because homeownership is now less expensive than renting in many U.S. cities, home demand among buyers continues to rise.
For today’s home buyer, market conditions appear ripe. Mortgage rates are near all-time lows, low-downpayment mortgage program remain plentiful, and home values have been rising since late-2011. Within 6 months, rates may be up and homes prices, too. Purchasing power would decline, decreasing home affordability nationwide.
The best “deals” in housing, therefore, may be the ones you find today.
Mortgage markets improved slightly last week. With a dearth of new U.S. economic data due for release, investors turned their collective attention to the Europe, China, and the Middle East.
U.S. mortgage rates fell slightly in the holiday-shortened week.
According to Freddie Mac, the average conforming 30-year fixed rate mortgage is now 3.39% nationwide for borrowers willing to pay 0.7 discount points plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of the borrowed loan size.
As an illustration, a bank’s charge of 0.7 discount points on a $100,000 mortgage would cost $700 to the borrower.
Freddie Mac also reported the average conforming 15-year fixed-rate mortgage rate at 2.70% nationwide with an accompanying 0.6 discount points plus closing costs. Loans with zero discount points carry a higher mortgage rate average.
This week, data returns to Wall Street as a series of housing reports are slated for release, in addition to inflationary reports such Tuesday’s Consumer Price Index (CPI).
The week begins with Retail Sales, released at 8:30 AM ET Monday. On a strong figure, mortgage rates in Cornville are expected to climb. This is because Retail Sales data is closely tied to consumer spending and consumer spending accounts for more than two-thirds of the U.S. economy.
A growing economy tends to pull mortgage rates higher.
Tuesday’s CPI may do the same.
Inflation erodes the value of a mortgage bond so when inflation pressures grow, demand for mortgage bonds fall which, in turn, causes mortgage rates to rise. If CPI is higher-than-expected, mortgage rates will likely rise.
Then, there’s a flurry of housing data. The Housing Market Index (Tuesday), Housing Starts (Wednesday) and Existing Home Sales (Friday) all hit this week. Strength in housing may lead mortgage rates higher, harming home affordability for today’s home buyers.
At today’s mortgage rates, every 1/8% increase raises monthly mortgage payments roughly $7 per $100,000 borrowed.
For the first time in 9 weeks, mortgage rates have made new lows.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage rate fell 6 basis points to 3.49% this week, tying the all-time low set in late-July. The 15-year fixed rate mortgage also dropped, moving to 2.77%. This, too, marks an all-time low.
The Federal Reserve’s plan to pressure mortgage rates down may be working.
However, depending on where you live, your access to these all-time rates may be limited. This is because the Freddie Mac “published rate” is a national average based on the government-backed group’s survey of more 125 banks.
Mortgage rates can vary by region.
For example, this week, mortgage applicants in the West Region are most likely to get the lowest rates of anyone.
In the West Region, 30-year fixed rate mortgage rates are averaging 3.43 percent with an accompanying 0.6 discount points. By contrast, applicants in the Southeast Region are most likely to get the highest rates with the 30-year fixed rate mortgage is averaging 3.53% with an accompanying 0.7 discount points.
1 discount point is a fee equal to one percent of your loan size. Loans with more accompanying discount points pay higher total closing costs.
This week’s record-low rates are a boon to home affordability and, as compared to last September, mortgage rates are much improved :
- September 2011 : Average rate of 4.09%
- September 2012 : Average rate of 3.49%
Over the past 12 months, this 60-basis point mortgage rate improvement has increased the maximum purchase price of a Cornville home buyer by roughly 7%. Home prices, however, may soon catch up.
Earlier this week, the Census Bureau reported Housing Starts at a multi-year high and the Existing Home Sales report from the National Association of REALTORS® showed the same. Housing is in recovery and prices are on an upward trajectory.
Take advantage of low mortgage rates while they last. Talk to your loan officer today.
Mortgage markets worsened slightly in last week’s holiday-shortened week. As expected, Wall Street took its cues from Europe and from the U.S. jobs market, and mortgage rates moved across a wide range.
Home buyers in Sedona and would-be refinancing households were greeted with wildly varying mortgage rates, depending on which day they loan-shopped.
According to Freddie Mac’s weekly mortgage rate survey, 30-year fixed rate mortgage rates averaged 3.55% nationwide last week, with an accompanying 0.7 discount points.
That is, until Thursday’s meeting of the European Central Bank.
The ECB is similar to the Federal Reserve in that, among its primary functions, it provides liquidity to banking systems in times of crisis. Thursday, the European Central Bank intervened with force.
To aid Spain and Italy, the third- and fourth-largest Eurozone economies, the European Central Board launched a bond-buying program meant to reduce speculation that the two nations — and the Euro itself — would fail.
The move calmed investors and sparked a broad equities market rally.
U.S. mortgage rates did not fare so well, however, climbing as much as 0.25% and leaving that “Freddie Mac mortgage rate” in the dust. If you tried to lock a loan Thursday, you may have been greeted with a rate nearing 4.000 percent.
Fortunately, those rising rates were short-lived.
Friday morning, the U.S. Bureau of Labor Statistics released its August Non-Farm Payrolls report and mortgage rates dropped. Far fewer jobs were created in the U.S. than was expected. 96,000 net new jobs were made in July. Wall Street had expected 130,000. This increases the likelihood of new Fed-led stimulus — perhaps as soon as this week.
The Federal Open Market Committee meets for the 6th of eight times this year later this week; a 2-day get-together scheduled for September 12-13. The Fed may announce a new round of market stimulus. If it does, mortgage rates should fall. If it doesn’t, mortgage rates may rise.
Other news affecting potential housing payments this week includes the release of key inflation data Thursday and Friday, and Friday’s Retail Sales data.
After 4 weeks of rising costs, Cottonwood mortgage rates finally recede.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage rate dropped 7 basis points to 3.59% this week. Depending on where you live, however, you may find that your offered mortgage rates varies. Freddie Mac’s “published rate” is a national average based on a survey of more 125 banks.
The rates you receive as an individual vary by bank, and vary by region.
Mortgage applicants in the North Central Region were most likely to get the lowest rates of all applicants nationwide last week. By contrast, applicants in the Southeast Region were most likely to get the highest rates.
Average mortgage rates in the five U.S. regions, as tracked by Freddie Mac :
- Northeast Region : 3.59 percent for a 30-year fixed rate mortgage
- West Region : 3.58 percent for a 30-year fixed rate mortgage
- Southeast Region : 3.64 percent for a 30-year fixed rate mortgage
- North Central Region : 3.57 percent for a 30-year fixed rate mortgage
- Southwest Region : 3.61 percent for a 30-year fixed rate mortgage
Across all 5 regions, mortgage rates were quoted with an accompanying 0.6 discount points, on average, plus a full set of closing costs. 1 discount point is equal to one percent of your loan size. Closing costs vary by county.
One year ago, the 30-year fixed rate mortgage rate averaged 4.22%. Today, it averages 3.59%. This 63 basis point difference yields a $36 monthly savings per $100,000 borrowed.
On a $250,000 mortgage, that’s $1,080 in savings per year.
If watched mortgage rates rise through August and felt as if you missed the market bottom, consider this week your second chance. The 30-year fixed rate mortgage does remains above its all-time low of 3.49 percent, but this week’s drop in rates in encouraging. It’s the biggest one-week drop in rates in more than 3 months.
Talk to your loan officer about how today’s mortgage rates can work for your budget.