Mortgage rates move up as stock market rallies
July 18, 2008
The stock market had a solid week of gains for the first time in the past sixty days. The market breathed a bit easier after solid earnings from key financial companies such as JP Morgan Chase and Wells Fargo helped to reassure the financials that the banking industry was still capable of being profitable. The yield on the ten year bond jumped almost thirty basis points for the week as the ten year adjusted from 3.8 up to near 4.1% on Friday. The net effect is that fixed mortgage rates moved up approximately 3/8 of a percent with most mortgage lenders.
This year has been a roller coaster ride for both the stock market and mortgage rates. The rapid decline in oil prices this week could help to bring mortgage rates lower in the near future if the trend continues as this will help to ease up some of the inflationary pressures in the market. Corporate earnings have already been damaged by high energy prices, but certain industries are likely to continue to see some improvements, such as banking, which has build in a good portion of their losses from the mortgage credit crunch to date.
Mortgage rates zoom up
June 11, 2008
Mortgage rates have moved up fast in the month of June. The ten year bond finished at 4.1% in trading on Tuesday, June 10th the highest level it has been in 2008. Fixed rate mortgage loans are now well into the six percent range with the national average hovering around 6.5%.
The market has been under severe pressure from the rapid increase with oil prices. There is a growing concern that the level of inflation in the market will continue to grow, despite the slow down with the overall economy as energy prices continue to climb. The economy has been quite resiliant in the 2nd quarter. Ben Bernanke recently issued statements stating that he believed inflation would slow down as the economy slowed down, but many investors are now concerned that the Fed would look to increase the fed funds rate as early as the fall of 2008. The housing market has yet to break out of its down turn and higher mortgage rates will place a further strain on this industry.
Consumers who may be in the market to buy a home or are considering a refinance should act soon to lock into fixed rate mortgages as there is a good chance interest rates will continue to move up through the course of the summer.
Housing market to be focus for stock market this week
May 18, 2008
The stock market has enjoyed a nice rally over the past month despite rapid rising oil prices. The national association of Realtors will report existing home sales for the month of April on Friday of this week. The market has written off the idea that the real estate market will recover significantly in 2008 and most economists, home builders and mortgage companies are now stating that they think it will be well into 2009 before the market begins a true correction.
The significance of Friday’s report is mostly about the psyche of the American home buyer, if the report shows a glimmer of home this may help to provide some long awaited positive pr for the real estate market. The number of potential home buyers sitting on the sidelines anticipating further price drops may decide that the market does not have much further to fall and begin the process of looking for a home. Mortgage rates remain very attractive and recent changes with both Fannie Mae and FHA are allowing home buyers to get into homes with as little as 3% down payment.
The market could use a lift, if the home sales figures are better that anticipated the stock market could rally and the only downside is this may pressure a rise with mortgage rates which remain firmly near six percent.
Bernanke catches up with rest of country
April 2, 2008
The U.S. economy has been a disaster for the better part of the past six months. If you listened to speeches by Ben Bernanke during that period you would have never heard the acknowledgement that the U.S. economy is in a recession.
This finally happend today! The Fed has cut the Fed Funds rate a full two pecent since the beginning of the year. Congress has issued rebate checks in the amount of one hundred and fifty billion dollars, but there has never been an acknowledngement that the U.S. economy was in a recession. The fact that the economy lost jobs in the month of February and one of the largest investment banks in the world Bear Stearns was facing near bankrupcy was a sure sign that things were not well on wall street. U.S. home values have decreased by over 10% over the past twelve months.
Bernanke’s testimony is curious as the stock market staged one of the largest rallies in U.S. history rising by almost 400 pts to start the second quarter of trading. Many investors believe that the worst of the credit crisis is now over and the U.S. economy, while certainly in a period of recession should begin to show signs of life by the third or fourth quarter of this year. The Fed chairman has been active in working to bring the economy out of it’s down turn, no matter how he wanted to phrase this in the past.