Rate Lock Advice : How Mortgage Rates Are Expected To Perform This Week (August 5, 2013)
Mortgage rates -- despite huge daily swings -- were mostly unchanged last week overall.
The Fannie Mae (FNMA) 3.5% coupon dropped -1/32 between Monday and Friday and Fannie Mae bonds are the basis for Harp 2.0 mortgage rates. This explains why HARP rates and standard "20% down" rates idled last week on the whole.
By contrast, the Ginnie Mae (GNMA) 3.5% coupon improved, moving +2/32. Ginnie Mae bonds help to set rates VA loans, FHA loans, and USDA mortgages. These rates, too, were unchanged.
Mortgage rates may drop this week.
Freddie Mac : 30-Year Fixed At 4.39%
Between Monday and Friday, mortgage rates were unchanged. However, according to Freddie Mac, last week, the average 30-year fixed rate mortgage rate climbed 0.08 percentage points to 4.39%.
This is because the Freddie Mac survey is based on responses from more than 100 banks nationwide, most of which are report rates on Monday and Tuesday. Mortgage rates had moved higher on those two days, which explains why Freddie Mac reported rising rates.
Between Wednesday and Friday, however, mortgage rates retreated, but it was too late for Freddie Mac's survey to capture.
The average "prime" borrower is paying 0.7 discount points for the 4.39% 30-year fixed rate mortgage. Applicants who choose pay additional discount points are receiving lower rates that Freddie Mac reports. Applicants paying zero points are receiving higher rates.
4.50% might be a typical zero-point mortgage rate.
Freddie Mac's reported rates assume loan sizes are no larger than the 2013 conforming loan limit of $417,000, and assume a 20 percent downpayment on a purchase. Applicants using high-balance conforming mortgages in such cities as San Francisco, California; New York, New York; and King County, Washington are receiving slightly higher rates, on average.
Last week's rate shoppers, however, saw rates carve out a huge range.
The first big shift in rates occurred Wednesday afternoon after the Federal Reserve adjourned from its fifth scheduled meeting of the year.
In its customary, post-meeting statement, the Fed re-iterated that its policies are data-dependent, and the group provided no guidance that QE3 would soon "taper".
QE3 is the Federal Reserve's mortgage rate-suppressing program. So long as it runs at full-strength, mortgage rates will remain steadfastly low. Mortgage rates made big gains on the news.
Meanwhile, the Fed's data dependency moved into focus Thursday morning when Wall Street was surprised by a stronger-than-expected Q2 GDP reading. By late-morning, all of Wednesday's gains had unwound and mortgage rates moved higher. Thankfully for rate shoppers, the shift was short-lived.
Friday morning, the Bureau of Labor Statistics showed 162,000 net new jobs created in July -- fewer than expected -- plus a net revision lower to the prior two months of data. Despite a drop in the jobless rate, the report was viewed as "weak" so mortgage rates dropped.
Mortgage rates are affordable. Call Geoff or Dave for today's rates at 928-778-7720.
What's Next For U.S. Mortgage Rates
There's little on the economic calendar this week which could be good for rate shoppers. This is because, in the absence of data, momentum moves markets and, since the start of July, momentum has helped to drag U.S. mortgage rates down.
The schedule for the week ahead :
Monday : Richard Fisher speech
Tuesday : NAHB Improving Market Index; Charles Evans speech
Wednesday will likely be the most important day for rates this week because of the 10-year Treasury auction. If the auction receives high demand, it indicates demand for U.S. debt which often yields a broader bond-market rally.
When mortgage bonds gain, mortgage rates drop.
Fed speeches will also affect rates this week. Four Fed members will give public remarks. If any give hints about the future of QE3, mortgage rates should shift accordingly.
See Today's Accurate Mortgage Rates
The future of mortgage rates is unknown -- it always is. Mortgage rates drop through the next few weeks, easing into Fall. Or, mortgage rates may reverse. The Fed remains data-dependent and economic data is still rolling in for this quarter.
We can't know in which direction rates will head. If you've thinking of a refinance or planning to buy a home, then, consider getting started with a free, personalized mortgage rate quote based on your specific loan needs.
Call Geoff Sweeney or Dave Koch for today's mortgage rates. We're available 7 days a week to answer questions or