First Time Home Buyers
We’re now in a 10-day mortgage rate rally that started on April 5th and could not have been better timed for first time home buyers. With the end of the first time home buyer tax credit looming, there are a lot of pending contracts. Many loans for first time home buyers have seen a .25-.50% drop in the past 10 days.
Last week marked the second consecutive week with substantial improvement and it again came from “safe haven” buying as investors reacted to news both abroad and closer to home.
Overseas, Iceland’s volcanoes left air traffic grounded throughout much of Europe last week. This story may not be over yet. The worst doom & gloom predictions are very ugly. The best predictions just mean that a lot of produce and other perishables will spoil before reaching their final destinations.
Domestically, the SEC announced fraud charges against Goldman Sachs. We’ll see where this story eventually goes, but the charges sent Wall Street tumbling and mortgage rates improved significantly on Friday.
Mortgage Interest Rate Predictions for This Week
This week is very light on news and we don’t really see anything of consequence until Thursday. Then we’ll see:
- Initial Jobless Claims : Important vis-a-vis broader employment figures. A strong number could push rates up.
- Existing Home Sales : Housing remains a key part of the economy. Strong sales are expected because of the tax credit.
- Producer Price Index : A “Cost of Living” index of business. A weak reading is expected because inflation is low.
Friday closes out the week with the New Home Sales report.
Even a loaded economic calendar wouldn’t be the biggest driver of mortgage rates this week. The external factors of large clouds of ash over Iceland and large clouds of uncertainty over Wall Street are why rates went lower. Trends like we have seen lately, with safe haven buying pushing rates lower, tend to reverse and reverse quickly.
We’ve picked up a lot of ground in the past few weeks and this will reverse. You probably stand to lose more than you stand to gain by floating rather than locking your loan.
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