The Greece & European mess continues to push money into America for safer investments.  With more money coming in, it’s helping push mortgage rates lower…for now.

We’re back at the lowest mortgage rates of the year.  Levels that we have seen twice this year and immediately jumped higher.

This week’s mortgage rates will be influenced by an absolutely loaded economic calendar.  There is home builder sentiment, building permits and housing stocks to gauge housing.  We’ll see the price index for both producers and consumers this week.  The we’ll get the always-influential jobs reports and Fed minutes from last month’s meeting.  Volatile.  All week.

We’ve seen mortgage rates get this low in 2010, twice.  Once in February, once in March.

Interest rates immediately reversed and jumped higher.

If you haven’t guessed already, our predictions this week are for volatility that ultimately could end with higher rates.   If you’re considering whether or not to lock a loan, you stand to lose very little by locking today.   Rates have NEVER stayed this low and, worse, when they have moved away from these levels, it’s been to the order of 0.5%, not just a 0.125% increase.

The biggest stories of last week were actually non-stories.

First, the ash cloud from Iceland’s Eyjafjallajökull volcano dissipated, allowing warehouses to move inventory, airlines to move people, and businesses to move product.  In addition, Greece moved closer to securing emergency funding that will help it stave off default.

When these two issues were threats earlier in the month, mortgage bonds rallied on safe haven buying, driving rates down. As the threats lessened over the course of last week, however, mortgage bonds sold off and mortgage rates rose.

By contrast, this week features lots of stories. Economic data will be at the forefront, as will the Federal Reserve which meets for one of its 8 scheduled meetings of the year.

• Monday : Greece is expected to announce an aid package
• Tuesday : Case-Shiller Index reports on home values from February
• Wednesday : Fed adjourns from its 2-day meeting
• Thursday : Initial Unemployment Claims are released
• Friday : GDP and consumer confidence numbers are released

Furthermore, Wall Street will have its eye on the Senate’s questioning of key Goldman Sachs employees in the wake of the SEC’s fraud charge.

In general, news that’s “good” for the U.S. economy will be bad for mortgage rates, and vice verse.  And with mortgage rates changing as quickly as they have been, rates could really rise in a hurry.

The best defense against rising mortgage rates is to execute a rate lock. If you’re nervous about rates moving higher, call your loan officer and execute your rate lock today.

That doesn’t directly relate to “no change” in rates for the first time home buyer programs, but the release was good news for mortgage rates.

In its press release, the FOMC noted a number of positive things.  Sound bites included:

• U.S. economy “has continued to strengthen”
• Jobs market “is stabilizing”
• Business spending “has risen significantly”.

Positive economic news is typically negative for bonds.  This is six straight optimistic releases from the Fed and we’re moving out of the 2008-2009 recession.

The main reason that first time home buyer mortgage rates didn’t move was that there is simply no threat of inflation right now.  That’s great news for bonds and great news for mortgage rates.

There are still some threats:

1. High unemployment threatens consumer spending
2. Housing starts are at a “depressed level”
3. Consumer credit remains tight

Positive tone, slight concerns, and indications that inflation is under control.   Does housing drive the economy or does the economy drive housing? Probably both.

What we’re seeing from the Fed right now are the signs that the people who buy now should see lower rates and lower home prices.  Better news for today’s first time buyer is that a rising economy will help make buying today a great long-term option as housing prices recover.

Next release is April 27-28.

It was the first losing week for mortgage rates in March.

Mortgage rates are nearly 30 days into their very impressive, and somewhat unlikely, rally.  Weaker-than-expected economic data is one reason why.  Lack of economic data may be another.

Loan Rate Predictions | This Week

This is the busiest economic calendar that we have seen in quite some time.  Here’s some of what is coming:

• Monday : Industrial Production and Home Builder Index
• Tuesday : Housing Starts and Building Permits
• Wednesday: Consumer Confidence
• Thursday : Producer Price Index and Initial Jobless Claims
• Friday : Consumer Price Index and Continuing Jobless Claims

As if that wasn’t enough, the Fed meets tomorrow.

We’re not expecting the Fed Funds Rate to move, but we’re expecting the post-meeting press release to be the firecracker that it normally is.

Wall Street will act on the press release.  If the news is positive about the economy or if inflation is a concern, mortgage rates will go higher.  If the release is surprisingly pessimistic, rates might dip a little lower.

With the first time home buyer tax credit winding down, you’re probably better off finding a home sooner rather than later.  Mortgage rates could very easily move .5% higher and it would be tough for them to go even .125% lower.

• Consumer Confidence posted 16% short of expectations
• New Home Sales posted 13% short of expectations
• Initial Jobless Claims were higher than expected

Rates didn’t go as low as they could have for one major reason.  Fed Chairman Ben Bernanke explicitly eased some concerns that the monetary policy would get too tight, too quick for the liking of the stock market.  In his semi-annual testimony before Congress, Bernanke stated that the Fed Funds Rate would stay low for an extended period of time.  Stock traders like the prospects of low rates and Wall Street rallied on Friday afternoon.

Mortgage Rate Predictions for First Time Home Buyers

This week should see any of a few things move rates for first time home buyer programs.

The jobs report hits on Friday and should be the most influential piece of data this week.  Expectations are that 30,000 jobs were lost in February.  More losses, lower rates.  Less jobs lost, higher mortgage rates.

Additionally, the U.S. dollar will swing rates.  As the dollar grows stronger, rates go lower.  With absolute chaos in Europe right now, rates have been held lower.  If the EU can figure out what to do with Greece, rates could tick a bit higher.

This all ties into the “free market” mortgage rates, conforming rates and the FHA rates.  Other loans for first time home buyers, such as the state programs, do not change as often.

Right now, rates are incredibly low.  We’re still forecasting them to go up eventually, it’s just a matter of when.

This is four weeks in a row where rates have improved for all of the most popular loans for first time home buyers.

We’re now at the lowest rates in 45 days, but probably shouldn’t be.  We have seen strong corporate earnings, continued stability in housing, and the general economic trends are pointing in the right direction.

Rates went down last week for one reason:  Everywhere else in the globe seems like a really risky investment so money flooded into the relative safety of U.S. mortgage bonds.

For this week, we’re seeing that the same thing could repeat itself.  There is almost no economic data due out except for the Retail Sales report.  That means that most of the news influencing mortgage rates for first time home buyer programs will occur when overseas markets are open:  China, Greece, Spain, Ireland, etc.

Mortgage rate predictions for this week?  Watch the overseas news.  If you’re under contract and therefore able to lock, it might make sense to do it soon.  Rates have been on such a good run that they’re back to where they were before…when they jumped .5% overnight.

Or, if you’re not sure, just give me us a call or click the chat button and we’ll email you when the market changes.