First Time Home Buyers
This surge in refinancing activity isn’t likely to end this week. Home loan rates ticked slightly higher last week after interest rates hit another record on Thursday, but then erased those gains and more during Friday’s session.
It was a choppy week of trading as Wall Street struggled with consistently disappointing data. Jobs, builder confidence, and housing data all pushed on a volatile week where mortgage rates changed multiple times per day.
This rate rally is going strong. According to Freddie Mac, here is what has happened to rates over the summer. “Then” was April 8, the most recent high-point. “Now” is last Thursday’s release:
- 30-year fixed : Then, 5.21%; Now, 4.42%
- 15-year fixed : Then, 4.52%; Now, 3.90%
- 5-year ARM : Then, 4.25%; Now, 3.56%
As an example of potential savings, a homeowner in Illinois with a $250,000 30-year fixed rate mortgage would save $96 per month at today’s rates as compared to April’s.
Over the life of a loan, that’s a savings of $34,560.
This Week’s Mortgage Rate Predictions
The economic calendar is pretty light. We have Existing home sales on Tuesday. Expectations are so low that a bad result is already priced into the market and a higher-than-expected number will probably meet disbelief on Wall Street. New home sales hit Wednesday. Thursday has the weekly jobless claims. That will be watched.
Claims jumped to 500k last week. That’s sort of an over/under number that the market watches. It’s also 50k higher than the May/June averages. What this means is that another higher number this week could strongly signal that another round of layoffs is occurring.
The Treasury will be borrowing another $102B this week. If there is anything amazing that has occurred in the past 18 months, it isn’t the all-time low mortgage rates. It is that the Treasury has found a market for US debt at the levels that we are issuing it.
This isn’t the type of week that will send rates up 1.0% overnight. We know that week will eventually come, but this doesn’t look like the week. This week still could be the one that creates that .25% quick hop that we’ve escaped so far.
Mortgage rates are part of a well-rounded financial plan. If today’s savings let you fund retirement or debt reduction better, move forward. The bigger picture outweighs any incremental improvement to mortgage rates.
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