Mortgage Rates and what may move them this week: May17, 2010

By
Mortgage and Lending with HomeBridge Financial Services (NJ) NMLS 248937

 

Last week was a mix of ups and downs with a rally at the end of the week that took us into positive territory by weeks end with just slight improvements over the previous week.  At this point we are at a low for the year and that probably will not last long since most of the drop in rates can be attributed to a flight to quality, NOT because of economic data.  European issues are still causing money to flow into our credit markets causing our rates to drop as that happens, once they decide to pull their money out (and they eventually will) we will see interest rates climb

This week has a few biggies to look at in addition to the Flight to Quality issues. here is this weeks calendar:

  • Monday May 17: In the absence of any real news the flight to quality continued today with a bouncy ride. Most of the day we were strongly in positive territory most of the day which has slipped pretty much to unchanged as the bell is about to ring
  • TuesdayMay 18: April PPI expected at +0.1% with a core of +0.1%. This number pretty clearly shows inflation under control, if the expectations match the report, it will be supportive of steady rates.
  • Wednesday, May 19: April CPI expected to match PPI at both the headline and Core levels. I should just cut and paste here.... These levels are interest rate friendly since inflation is the big fear in the interest rate world.
  • Wednesday: At 2pm the FED release the minutes of their April Meeting. Everyone expects the tone of the report to be slightly positive in terms of economic recovery with little worry about any inflation in the near future. Until we see employment pick up it is not likely that there will be any hint of a bump up in rates by the Fed.  This should be  a non even for the day.
  • Thursday May 20: Initial jobless claims expected down t0 440,000, still way above a happy place for the jobs report so likely be supportive of steady rates.
  • Thursday: April LEI expected +0.2%. Leading indicators are one of the most forward looking reports and this could hold back rates a touch and may cause a bit of upward pressure.
  • Thursday: Congratulations to my wife, Graduation day...
  • Friday: no news day.

No matter what happens this week in the above reports, it is likely that Europe will dictate the direction in rates. We have had increasing reports of recovery that should have bumped rates up by now, but the flight to quality from Europe has helped keep our rates low. My fear is this could be an artificial low and we could wake up to an unpleasant surprise soon...

So many factors come into play. First the Euro is very weak now, that may slow the cash coming into our country and possibly pull some out of our markets now since a Euro is cheaper to buy today than it was the beginning of the year. Also we may see a light at the end of Europe's Credit Woes and that will flow money out quicker than you can imagine.

The market will take a quick turn one of these days. I have no idea when but it will be quick and potentially painful for anyone that isnt on their toes.  From an interest rate standpoint, We are so close to the 40 year lows now, and at the lowest point of the year... They are WAY more likely to make a knee jerk reaction in the up direction than the down.  Play it safe, Get your loans locked.

 

Have a great week!

Rob

Robert Rauf

Mortgage Banker

NMLS ID# 248937

www.RobertRaufHomeLoans.com   or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Catherine "Cathy" Chaudemanche- Edison 05/18/2010 06:20 AM
  2. Gabe Sanders 05/18/2010 06:40 AM
  3. Daniel Guest 05/18/2010 02:07 PM
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Rainmaker
599,136
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Rob - Ok, I will.  This week is looking like a good week to lock in one (maybe two) of my floaters right now.  These days, I like to wait until I get the appraisals back before I lock.  Thx for the update Rob and have a good week.  :)

May 17, 2010 06:03 PM #1
Rainmaker
384,290
Catherine "Cathy" Chaudemanche- Edison
Metuchen Keller Williams Elite Realty / Middlesex County, NJ - Edison, NJ
Real Estate & Middlesex County in NJ

Thank you as always for the information Rob-

May 18, 2010 06:19 AM #2
Rainmaker
2,022,479
Gabe Sanders
the BlueWater Realty team specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Robert, thanks for the info.  This is worth re-blogging. 

May 18, 2010 06:40 AM #3
Rainmaker
591,092
Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

You are welcome Gabe and Cathy!

Donne, I think it is safe to lock now!  Just make sure you have a bit of a buffer zone built in incase the closing is held up.

May 18, 2010 11:37 AM #4
Rainmaker
599,136
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Rob - Always sound advice especially since on one of them I am still waiting for the appraisal (hope to have today). 

May 18, 2010 12:03 PM #5
Rainmaker
754,256
Larry Brewer
Benchmark Realty LLc - Nashville, TN
Nashville Real Estate

Noticing your calender, I think that the forecast may have changed, and I suspect that we will have plenty of news today that moves the market. What a week.

May 21, 2010 09:36 AM #6
Rainmaker
591,092
Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Larry, Europe still seems to be the overwhelming concern, toss in the fact that our inflation is just about non existent and you have a recipie for the low rates we have today. My concern is that the flight to quality that caused much of the rate improvement we have seen could quickly run away from our credit markets and we can see a spike in rates with out any warning.  Bottom line, we are truly flirting with the 40+ year lows, There "aint" much room for things to drop any further, but there certainly is a lot of upside potential... and that Knee jerk reaction is most likely to be up, not down

May 21, 2010 10:42 AM #7
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Rainmaker
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Robert Rauf

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