Mortgage Rate Projections: Week of April 12, 2010

First time home buyer loans dodged a bullet last week.  Rates jumped in that last week of March and the concern was that they could push higher.

The Fed’s $1.25T purchase program is gone and the economy is improving.  Shout if from the mountain tops:  the economy is improving.  From last week:

• Pending Home Sales posted a strong monthly improvement
• Wholesale Trade data pointed to higher consumer spending ahead
• Inflationary threats on the economy are receding, according to the Fed

Furthermore, continuing jobless claims were down again.  Rates should have jumped.

They didn’t.  Continued fears over the Greek mess drove investors to seek safe investments in the US.   Most loans for first time home buyers saw roughly 2/3′s of the prior week’s losses come back last week.  That’s great news.

Mortgage Rate Projections – This Week

If you are a first time home buyer and not under contract, I have a recipe for your long-term financial well-being.  Add equal parts of calmness and urgency.   Find your car keys.  Get your future home under contract.

There are two converging forces and they are big ones:

1. Rates are going to be volatile
2. There are other first time home buyers

For just this week’s rate projections, it could be volatile.  Very volatile.  Any resolution in Greece that removes the widespread panic in the Eurozone means at least .25% to interest rates in a matter of moments.  Beyond that, we have a loaded economic calendar from Wednesday to Friday.  A number of the big reports hit all towards the end of the week including the Consumer Price Index, Retail Sales, Consumer Confidence, and Housing Starts. That’s a lot of data.

The sooner you have a contract, the sooner you can lock in these absurdly low rates.  Rates will go up and they won’t wait until it is convenient for you.

First time home buyers are facing another simple reality:  There aren’t that many great homes in the market.  When a negotiation is a simple negotiation between a buyer and a seller, the offer-counteroffer sequence is pretty simple.  When there is a looming deadline like an $8,000 first time home buyer tax credit, the rules change.  Now, unless you’ve found the least desirable, most overpriced home in the market, you’ll run into multiple-offer situations.  It doesn’t matter what you think “the market” is like.  If a seller has more than one contract in their hands, your price just went up.  Perhaps only $1,000, perhaps only $2,000, but it could be more and it will happen if you wait.  We saw it in November, we’ll see it at the end of the month.

Rates are heading higher.  Possibly this week, possibly next.  If you’re not under contract, you can’t lock a rate.

Get shopping.