Looking at mortgage rates for the week of 5-14-2016…
Sorry for being late with this week’s update on mortgage rates. I was busy with another skirmish in the never ending battle with my lawn mower. I go it running again but another mangled blade has been added to the scrap metal bin.
Lots of stuff to talk about this week so let’s jump in with the mortgage rates:
Freddie Mac on Mortgage Rates:
Another week with good news from Freddie Mac because rates dropped again:
- 30 year fixed-rate mortgages averaged 3.57%
- Last week, 30 year fixed-rate mortgages average 3.61%
- Last year at this time, 30 year fixed-rate mortgages averaged 3.85%
- 15 year fixed-rate mortgages this week averaged 2.81%
- Last week, 15 year fixed-rate mortgages averaged 2.86%
- Last year at this time, 15-year fixed-rate mortgages averaged 2.89%
Check out the chart from Freddie Mac:
Sean Becketti, chief economist at Freddie Mac said:
Disappointing April employment data once again kept a lid on Treasury yields, which have struggled to stay above 1.8 percent since late March. As a result, the 30-year mortgage rate fell 4 basis points to 3.57 percent, a new low for 2016 and the lowest mark in 3 years. Prospective homebuyers will continue to take advantage of a falling rate environment that has seen mortgage rates drop in 14 of the previous 19 weeks.
For those that have been in a holding pattern on buying a home, this could justify the waiting…
Bankrate on Mortgage Rates:
Bankrate.com also reported that mortgage rates decreased:
The average 30 year fixed rate mortgages decreased to 3.75% from 3.77%
The average 30 year fixed rate jumbo mortgages increased to 3.77% from 3.76%
The average 15 year fixed rate mortgage decreased to 2.99% from 3.01%
The MBA on Mortgage Rates:
The average contract interest rate for 30 year fixed rate mortgages with conforming loan balances ($417,000 or less) was 3.82% for 80% loan-to-value ratio (LTV) loans. This is down from the 3.87% reported last week.
The average contract interest rate for 30 year fixed rate mortgages with jumbo loan balances (greater than $417,000) was 3.74% for 80% LTV loans. This is down from the 3.79% reported last week.
The average contract interest rate for 15 year fixed rate mortgages was 3.06% for 80% LTV loans. This is down from the 3.13% reported last week.
The MBA said that mortgage applications increased slightly from last week and that their unadjusted Purchase Index is 14% higher than the same week one year ago.
It appears that more buyers are becoming motivated by the low rates.
The Take Away:
Once again bad economic news has caused rates to decreased. You may remember I mentioned this possibility last week.
So what has happened since last week’s events?
Retail sales rose and this could indicate more consumer confidence. Since much of our economy needs healthy consumer spending, this is good news.
Job openings increased BUT jobless claims rose. Maybe the increase in people being out of work can somehow be offset by the increase in available jobs?
Bloomberg’s Consumer Comfort Index fell to a new low for 2016 and this is not good. According to the CCI, Americans’ ratings of the national economy dropped this week. However it could be worse and sometimes we forget just how bad things were just a few short years ago.
More small businesses reported job openings and plan to hire in April according to the latest NFIB survey. NFIB also said that small business optimism improved.
According to the latest Cass Freight Index, shipments rose 0.6% from the previous month BUT are down 4.9% compared to the previous year. They said that the economy got worse in the first 4 months of 2016 and that it may get worse before it gets better.
The report from Cass sounds overly pessimistic to me and this is saying a lot coming from me…
What do we need to watch this coming week?
Well Existing Home Sales from NAR for a start. While it is a national report, it is a pretty big indicator for the economy. I wouldn’t rely on it to make a decision about local real estate though…
Also we should look at the NAHB home builder survey for April that will be released on Monday.
The next thing I am interested to see is the Consumer Price Index on Tuesday. Since the Fed is intently watching inflation, it might gives us some insight on what to expect from them in June.
Also we will get the Commerce Department report on Housing Starts on Tuesday. With the tight inventory, we do need more homes nationwide. Plus more construction means another boost to the economy.
On Wednesday, we will get the FOMC minutes and this is a must watch/read. There may be clues as to when/if the Fed will raise their benchmark interest rate.
We also get the AIA’s Billing index on Wednesday and while it is a commercial real estate indicator, it is a big economic indicator also. Remember a healthy economy means a healthy housing market!