Mortgage markets carved out a wide range last week, eventually closing slightly worse. Mortgage-backed bonds sold off early in the week on rising investor sentiment. Then, they reversed higher on prepared remarks from Federal Reserve Chairman Ben Bernanke, which tempered Wall Street optimism.

When bonds prices rise, mortgage rates fall.

Conforming and FHA mortgage rates in Texas edged higher on the week, and remain at a 5-month high.

According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage is now 4.08% and the 15-year fixed rate mortgage is now 3.30%. Both loan types require an accompanying 0.8 discount points, plus a full set of closing costs.

1 discount point is equal to one percent of your loan size.

Last week’s conforming mortgage rates represent a sharp increase from the week prior when rates for the 30-year fixed rate mortgage and 15-year fixed rate mortgage averaged 3.92% and 3.16%, respectively.

If you’ve been shopping for a 30-year fixed rate mortgage, the interest rate increase added $9.22 to your monthly payment per $100,000 borrowed.

We can’t know in what direction mortgage rates will move this week, but we can be certain they’ll be volatile. Wall Street is suddenly on edge, unsure of whether the economy is improving as recent data suggests, or if the Federal Reserve is correct in that threats to growth persist.

The week’s data schedule is as follows :

• Monday : Pending Home Sales Index
• Tuesday : Consumer Confidence; Case-Shiller Home Price Index
• Wednesday : Durable Goods
• Thursday : Initial Jobless Claims; GDP
• Friday : Personal Income and Outlays

In addition, there are 6 Federal Reserve speakers scheduled for the week, including Chairman Bernanke. Expect mortgage rates to change frequently throughout the week as Wall Street wrestles with data and rhetoric.

Although mortgage rates spiked last week, historically, they remain low. If you’re nervous that rates may rise more, consider locking something in.

Mortgage markets worsened last week as the Federal Reserve’s Federal Open Market Committee suggested economic recovery may be closer than it originally expected, and that inflation may be a near-term economic concern.

Although the FOMC voted to leave the Fed Funds Rate unchanged in its current range near 0.000 percent, its published comments sparked a broad-based mortgage bond selloff.

Conforming mortgage rates throughout Texas rose sharply post-FOMC, climbing by as much as 0.375%.

If you’ve been shopping for a mortgage rate, the run-up was both untimely and unwelcome.

According to Freddie Mac’s weekly mortgage rate survey, for most of the year, conforming 30-year fixed rate mortgage rates had remained within a tight range near 3.90 percent for mortgage applicants willing to pay an accompanying 0.8 discount points.

This week, though, Freddie Mac is expected to report average 30-year fixed rate mortgage rates well north of four percent. It would mark the highest level for the benchmark mortgage rate since mid-December of last year.

There will be a lot more for rate shoppers to watch this week, too. There is a slew of housing data set for release and the heavily-anticipated HARP 2.0 Refinance program “goes live” nationwide.

HARP is a government-led refinance program meant to help underwater homeowners refinance their Fannie Mae- or Freddie Mac-backed mortgages into new loans at today’s low rates.

The program was first launched in 2009 and helped roughly one million U.S. homeowners. HARP’s newest iteration, though, provides for a more lenient underwriting process that is expected to open the program to an additional 6 million homeowners or more.

Mortgage rates may rise this week as a result of HARP-based loan volume. It may also rise on strength in housing — there are four data points due for release :

• Monday : Housing Market Index
• Tuesday : Housing Starts
• Wednesday : Existing Home Sales
• Friday : New Home Sales

As in most weeks, it’s less risky to lock a mortgage rate than to float one. Mortgage rates have much room to climb but very little room to fall. If you’re not yet locked, talk to your loan officer and make a plan.

Each week, I participate in Bankrate.com’s Mortgage Rate survey and this week’s results may help you make a money-saving decision.

The Predictions

Here’s what the group is saying:

• 31% predict mortgage rates will increase
• 16% predict mortgage rates will decrease
• 53% predict mortgage rates will remain unchanged

I expect mortgage rates to remain unchanged.

My advice not be appropriate for your specific situation and I’m not always right. You may be better off trying to eat super cold ice cream really fast.

Either way, here’s what I told Bankrate.com:

“With bond markets being abandoned last week, rates took a slight increase as predicted. I do not foresee any “market-shattering” news to come out that will swing mortgage rates in either direction, however the day-to-day volatility is still there and should be followed closely. Remember, there is lot more room for mortgage rates to rise than improve, so be on the defense.”

Rates are very sensitive these days, so you must be prepared to lock. Gambling should be completely out of the question.

Floating vs. Locking – What’s Your Strategy?

People often forget that today’s mortgage rates are a gift, but instead, are treated as a given.

In our current mortgage environment, consumers must also understand that underwriting is actually a tad bit more important than the mortgage rate itsef. The lowest rate does you absolutely no good if you can’t close on it.

With that being said, the Fed has exited the mortgage bond market and the economy is already on it way to recovery, so investors will be taking their money out of the safe-haven (bonds) and into the equity markets, causing rates to inch up. Rates fluctuate week to week, but the point where you save money is knowing what rates are doing DAILY. One adverse intra-day reprice can cost you thousands in the long-run, and this is where it pays to have a knowledgeable and market-savvy loan officer on your side.

If you are looking to purchase or refinance your home, get with a great lender, start on a loan application, know your payment limits, and have their number on SPEED DIAL (you think I’m kidding, but I’m not). This way you’ll be ready to lock in and beat any bad news later on.

I’m always available for phone calls or emails. Applications are about a 5 minute process, and can be done over the phone or via my online secure-application.

Each week, I participate in Bankrate.com’s Mortgage Rate survey and this week’s results may help you make a money-saving decision.

Conventional and Conforming Mortgage Rates Only

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages, VA mortgages, USDA mortgages and it’s not specific to Texas mortgage rates only. In addition, unique property types such as non-warrantable condos and condotels may be excluded, so keep that in mind.

The Predictions

Here’s what the group is saying:

• 47% predict mortgage rates will increase
• 12% predict mortgage rates will decrease
• 41% predict mortgage rates will remain unchanged

I expect mortgage rates to increase.

My advice not be appropriate for your specific situation and I’m not always right. Ultimately, you may find your time better spent by trying to perfect the Mr. Belding laugh.

Either way, here’s what I told Bankrate.com:

“The combination of strong home sales, lower jobless claims, and “big player” Q1 gains push mortgage rates north.”

Since April 5th, rates have been on an upward trend for the most part. Some days they go down, others up, however, the fact of the matter is now is not a good time to gamble.

Floating vs. Locking – What’s Your Strategy?

At around noon today, mortgage rates have already repriced for the worse by .125% – and with good reason.

Today’s big reports were the Initial Jobless Claims and the Existing Home Sales. Both came back with positive influence (less claims, more home sales), and when good news for the economy comes out, that’s not good for mortgage rates because investors move their money into the equity markets as opposed to the bond markets.

If you are looking to purchase or refinance your home, get with a great lender, start on a loan application, know your payment limits, and have their number on SPEED DIAL (you think I’m kidding, but I’m not). This way you’ll be ready to lock in before any intra-day reprices occur.

Knowledge saves money – remember that!

Mortgage markets improved yesterday after the Federal Reserve released its March 16, 2010 meeting minutes. It’s good news for in Houston home buyers and rate shoppers — rates could have just as easily gone the other way.

The Fed Minutes is a detailed recap of the debate and discussion that shapes the nation’s monetary policy. The notes are dense; it takes 3 weeks to compile them for publication.

As compared to the more well-known, post-meeting press release, the Fed Minutes are extremely lengthy. For example:

• March 16 press release : 451 words
• March 16 meeting minutes : 6,152 words

If the press release is the executive summary, the Fed Minutes are the novel.

The extra words matter.

The minutes recount what the Fed did, how the Fed did it, and what the Fed plans to do next – and, in these minutes, Wall Street looks for clues.

This is why the report is important to every rate shopper in the country.

When the Federal Reserve publishes the minutes from its meetings, it leave clues about the groups next policy-making steps.  For example, in March’s Fed Minutes, it’s clear that the Fed’s concern about inflation is hugely diminished and that’s a major plus for the mortgage bond market.

Inflation causes mortgage rates to rise. The absence of inflation, therefore, helps them to fall.  This improves home affordability, among other things.

Similarly, the Fed Minutes note that real estate sales may have been worse throughout the winter months if not for low mortgage rates and the sense among Americans that home prices were troughing. We may infer, therefore, that rising rates may suppress home sales later this year.

Markets are always looking for clues from inside the Fed and the last meeting’s minute signal that the economy is on its way up.

If you’re looking for a bargain in the housing market, your window to act may be closing.

These days, homes are more affordable than ever as the housing market emerges from a slow winter season and mortgage rates are still near 5 percent.

Soft housing and low rates are an excellent combination for home buyers but whereas home values rise with a gradual pace, mortgage rates can change in an instant.  It’s something worth watching, and also, something you need to hire a professional mortgage consultant to keep an eye out on as well.

Remember that each 0.25% increase to conventional or FHA rates adds approximately $16 per month for each $100,000 borrowed. Nothing to sneeze at, but something to be aware of.

If you’re trying to gauge whether rates will be rising or falling, I’m sorry to say, but there isn’t just one factor to look at.

One keyword to listen for is “inflation”, though. Mortgage rates are highly responsive to inflation, and this topic can swing your mortgage rate in the blink of an eye.

By definition, inflation is when a currency loses its value; when what used to cost $2.00 now costs $2.15. As consumers, we perceive inflation as goods becoming more expensive.  However, it’s not that goods are more expensive, per se – it’s that the dollars used to buy them are worth less.

This is a big deal to mortgage rates because mortgage bonds are denominated, bought, and sold in U.S. dollars.  As the dollar loses value to inflation, therefore, so does the value of every mortgage bond in existence. When bonds lose their value, investors don’t want them and bond prices fall and that causes Mortgage rates to go one way – UP!

Bond Prices down, rates up – very simple.

In today’s market, the relationship between inflation and mortgage rates is helping home buyers. The Cost of Living made its smallest annual gain in 6 years last month and the Fed has repeatedly said that inflation will stay low for some time. This combination is driving investors to buy mortgage bonds which, in turn, is suppressing rates and keeping them lower for the time being.

Please remember that this is not going to last forever, and you REALLY need to cash in while you can – the timing to buy a home in Texas may be as good as it gets, so try to get with a great Realtor and your Texas loan officer to get started.

We have been having a pretty nice run as of lately, I’ll have to admit:

Mortgage rates are super low, home prices are stabilizing, free $$$ from the government is going in our back pockets, and best of all, spring’s right around the corner.

Now that the economy is headed a bit more in the right direction, “mortgage-rate-reality” is going to start setting in for a lot of folks.

“Damn, Tommy – That 5% sounded really good last month. I wish we would of locked it in.”

“Yes, Mr. Johnson, I was telling you this, but remember you were telling ME that you were expecting that 3% , as well as the return of Growing Pains? Well look at us now. No Kirk and no 3%.”

Just last week, mortgage markets worsened with the  little economic news that came out. It just wasn’t enough to push markets in either direction and the momentum trading and re-balancing of portfolios drove mortgage rates higher, on average.

FHA and conventional mortgage rates in Texas rose last week, marking the first time that’s happened this month.

Like I said before, mortgage rates have been on impressive streak and are priced far better than what most experts predicted.

Weaker-than-expected economic data is one reason why.  Lack of economic data may be another.

This week, however, data returns.

• 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

And, as if all that weren’t enough to spook you, the Federal Open Market Committee meets for a scheduled, 1-day event Tuesday (tomorrow).

The Federal Reserve is expected to vote to hold the Fed Funds Rate in its current target range near 0.000%, but that doesn’t mean mortgage rates won’t change. Markets are responsive to the FOMC’s post-meeting press release and any clear talk of economic strengthening can easily drive rates higher.

A friendly reminder: The Fed does NOT control short-term mortgage rates, only the Fed Funds Rate. This is the overnight lending rate that banks charge each other.

So basically,  this week Wall Street is in Wait-and-See Mode with plenty to look at.

If you’re floating a mortgage rate, or waiting to lock, be prepared for wild swings – especially leading up to Tuesday afternoon’s FOMC adjournment.

Now’s the time to work with a mortgage professional that understands all this mumbo-jumbo and can get you a great deal, especially with all this volatility going on.

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Tommy is a senior mortgage consultant with Envoy Mortgage. For a free mortgage consultation, you can email him at
tommy@tr-mg.com. You can also find him on Twitter at @RightMtgGuy.

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by Victor Burek –

In a volatile session, mortgage rates ended yesterday’s session unchanged as a small rally in benchmark Treasuries helped support the MBS market.  Following weaker than expected economic data in the morning, rates rallied. However as profit taking took place later in the day, early session strength was lost and MBS prices returned to opening levels.  Overall, even though prices moved about a relatively wide range, rates remained unchanged on the day.

The Mortgage Bankers’ Association this morning released their weekly applications index. This data tracks the weekly change in the amount of mortgage applications at major lenders.   An increasing trend is positive for the economy in two ways.  First, more home purchases leads to more home construction and consumer spending as the home buyer buys items to fill the new home.  Second, higher amounts of refinancing  should also lead to higher consumer spending as homeowners refinance to lower rates and lower payments giving them more money to spend into the economy.   The report shows that purchase applications have fallen again down 4.7% following last week’s plunge of 11.7%.  The refinance activity posted a modest 1.4% increase following the prior week’s 11.3% increase as homeowners rush to lock in low mortgage rates.

Besides the mortgage application data released by the MBA, we also received a read on housing construction from the Commerce Department, Housing Starts.  This data totals the number of new homes that construction has started on an annualized basis.  More home construction leads to more construction jobs and increased spending as goods are bought to build and furnish new homes; as such, MBS generally move higher with a lower reading while the stock market likes to see increasing housing starts.     More importantly, this report  totals the number of homes where a building permit has been issued.   Recent reports have indicated a bottoming of this data, economists surveyed expected this report to continue that trend.

The report indicated that home builders are breaking ground on much fewer homes than expected.  Housing starts plunged almost 11% to a yearly pace of only 529,000.  Housing permits also came in considerably lower than expected at 552,000 after last month’s annual pace of 575,000.

The final report to hit  news wires this morning was the Consumer Price Index.  This report measures the change to the average price level of a fixed basket of goods and services purchased by consumers which represents the rate of inflation.   All recent reports have shown inflation to be of no concern today and that trend was expected to continue.   Like the PPI report we received yesterday, this data gives us two readings, overall CPI and the core CPI.  The core reading strips out food and energy prices due to their volatility.

The report indicated that consumer prices rose 0.3% in October, this  followes a 0.2% rise last month. The core rate moved higher by 0.2%, matching last month’s increase, both slightly higher than expected.   On a year over year basis, overall consumer prices are down 0.2% while the core rate shows a 1.7% increase in consumer prices, which is within the Fed’s comfort zone.

Reports from fellow mortgage professionals indicate that mortgage rates are unchanged from yesterday.   This keeps the par 30 year conventional rate mortgage in the 4.625% to 4.875% range for well qualified consumers.  To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% and pay all closing costs including an estimated one point loan origination/discount/broker fee.  If you are seeking to access equity in your home, you should expect either higher closing costs or a higher interest rate.

Is everybody who is closing in the next 30 days locked yet?

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For today current VA, FHA, USDA, Jumbo, Home Equity, Refinance Rates, contact your Texas Refinance Lender today!