The outlook for the U.S. economy improved last week, taking the mortgage bond market with it. For the first time this year, conforming mortgage rates rose throughout CA from one week to the next.
Data was strong across all categories last week.
- Home Resales :Existing Home Sales rose 5%
- New Homes : Single-Family Housing Starts rose 4%
- Builders : Home Builder Confidence rose to a 5-year high
- Jobs : Jobless claims fell to lowest level since April 2008
- Inflation : CPI remained in balance
In addition, European leaders moved closer to a final resolution on the Greek sovereign debt default situation.
Overall, the action gave investors reason for optimism in the U.S. economy, and economies abroad. This drew money away from the U.S. mortgage bond market, which caused mortgage rates to rise.
Freddie Mac reports the average 30-year fixed rate mortgage slipping 0.01 percentage points to 3.88% nationwide, with an accompanying 0.8 discount points and complete set of closing costs.Â These costs are slightly higher as compared to the week prior.
1 discount point is equal to one percent of the borrowed loan size.
Freddie Mac’s weekly mortgage rate survey puts the conforming 30-year fixed rate mortgage under 4 percent for 7 consecutive weeks.
This week, mortgage rates may rise; the week is anchored by a 2-day Federal Open Market Committee meeting. Whenever the FOMC meets, mortgage rates can be volatile.
The Ben Bernanke-led FOMC is not expected to raise the Fed Funds Rate from its current target range near 0.000 percent, but it’s not what the Fed does that can change mortgage rates as much as it is what the Fed says.
After its 2-day meeting concludes Wednesday, the FOMC will issue its customary statement to the markets, to be followed by a press conference led by Chairman Bernanke. Wall Street will watch the press release and conference for clues about the Fed’s next steps and its outlook for the U.S. economy.
If the Fed indicates that the economy is growing, mortgage rates in Cardiff By Sea are likely to rise. Conversely, if the Fed indicates that the economy is slowing, mortgage rates are likely to fall.
Other factors influencing mortgage rates this week include the President’s annual State of the Union address (Tuesday), the Pending Home Sales Index (Wednesday) and New Homes Sales data for December (Thursday).
Mortgage rates remain low but may not stay that way. If you’re looking for the best rates of the year, this week may be your chance.