Here is your mortgage market watch for the week of October 26th.
One of my goals as a real estate consultant is to provide my clients with as much valuable information as possible. Naturally, one of the biggest questions on the minds of home buyers and sellers is; how do interest rates look? Its important to pay attention to the details because the headlines can sometimes be deceiving. I receive weekly briefs from my mortgage partners and I will summarize and pass along the important facts. This information is provided by the Mortgage Market Guide.
Its important to remember that 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 typically has the opposite result.
Two weeks ago, the Core Consumer Price Index (CPI) was reported higher than expected, indicating inflationary forces may already be underway. Inflation erodes the value of the fixed return that a Bond provides - therefore inflation has harmful effects on bonds and home loan rates. Just a hint of inflation can cause home loan rates to worsen which is what we have seen over the past couple of weeks and what economists predict will continue to happen over the next year. The truth is that we may never see interest rates at these levels again in our lifetime.
In national housing news, Housing starts and Building permits both came in slightly lower than expectations which may indicate that builders are exercising some caution in the face of the First Time Home Buyer Tax Credit which is currently scheduled to expire on November 30th.
On the flip side, existing home sales came in better than expected. A vast majority of those sales (45%) were sold to first time home buyers - rushing to move in on the tax credit.
If you have specific questions about interest rates or the mortgage market as a whole, email me and Ill introduce you to one of my trusted mortgage partners who would be happy to enlighten you on any questions or concerns you might have.
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