Forecast for the Week
While it’s hard to say what opinions might be uttered this week, there will definitely be plenty of news in store.
We’ll get a look at the housing market with Wednesday’s New Home Sales Report and Friday’s Existing Home Sales Report. It will be interesting to see if these reports are looking more positive, as many buyers are working to take advantage of the Homebuyer’s Tax Credit before it expires this spring. If you want to learn more about this Tax Credit and how it might help you or someone you know – don’t hesitate to get in touch with me, I can share all the details and important timelines.
Also this week, we’ll get several reads on the health of the economy with Thursday’s Durable Goods Report – which gives us an update on consumer and business buying behavior on big ticket items that last for an extended period of time – and Friday’s Gross Domestic Product Report, which is the broadest measure of economic activity.
Tuesday’s Consumer Confidence Report and Thursday’s Initial Jobless Claims Report will also be important to watch. Last week’s Initial Jobless Claims and Continuing Claims numbers were higher than expected, showing that the labor market is still struggling. The bottom line is that while some of the recent economic reports have had encouraging signs, the economy needs to create jobs and regain consumer confidence before any positive opinions on the economy will become reality.
And as if it won’t be a week jam packed full of opinions already, Fed Chairman Ben Bernanke will be weighing in with some thoughts of his own, as he testifies before Congress on Wednesday and Thursday.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, Bonds ended the week below an important technical level. I’ll be watching closely to see if Bonds can reverse course and move higher this week, which would result in an improvement for home loan rates.
Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 19, 2010)
The Mortgage Market View…
Rates May Be Headed Up Soon…But Why?
You’ve heard a lot over the last several months about historically low home loan rates…but lately, you’ve probably been hearing the buzz that interest rates may be heading up in the near future, due in part to the Fed ending their purchases of Mortgage Backed Securities.
All of this begs the question: How and why do rates move…and what is happening right now?
The answer involves a number of factors and can seem complex. But it doesn’t have to be!
To help you understand how interest rates move, take a look at this easy to understand video. You’ll learn what the Fed has been doing to keep rates low, as well as the connection between interest rates and Mortgage Backed Securities.
Take a look at the following video now for an easy explanation:
How Rates Move – and What it Means Right Now
Patrick Dunn, Westwood Mortgage Inc. & MMG Weekly
patrick@westwoodmortgage.com / http://www.certifiedplanning.com