Florida mortgage rates suffered a real blow last week, with Wednesday’s one day rate hike pushing record highs for a single day increase. Though things improved a little on Thursday and Friday, mortgage rates still moved higher on the week overall.
Overall, Florida mortgage interest rates have moved up on 4 occasions over the past 5 weeks.
Main Story from Last Week: The Mortgage Meltdown
Just a little past 1:00 PM ET last Wednesday, Florida mortgage rates began moving upward and over the ensuing 90 minutes, to 30-year mortgage rate soared to near record highs for a single day’s increase.
To put the dramatic nature of this record upward movement into perspective – the movement happened so quickly that many mortgage lenders simply shut down their Lock Desks, unwilling to accept new business.
What Spurred Wednesday’s Massive Mortgage Rate Increase?
Great question. There really wasn’t any one piece of news or collection of news stories responsible for the rate hike. What we saw instead was a confluence of national opinion – a feeling if you will, specifically on Wall Street – that the massive weight of our U.S debt load might lead to inflation sometime in the near future.
As I’ve said here many times – inflation is the enemy of mortgage rates. As fear of inflation increases, mortgage rates increase with them. This is what happened last Wednesday.
Mortgage markets calmed down a bit on Thursday and Friday, but not without a bit of fiscal scarring. In fact, overall – we only saw a correction of about 50 percent after Wednesday’s increase.
Things to Watch Out for This Week…
For this week, keep watch mainly today and Friday – as these will be our biggest news days.
Monday – Consumer Spending and Inflation Information
We’ll see consumer spending information for May come through channels today, along with the Federal Reserve’s preferred inflation gauge. If either of these data points fails to meet expectations, mortgage rates should increase.
Friday – Employment Data Comes Due
Friday will bring us the employment report. Though it’ generally felt that good employment numbers are good for the country – if numbers come in better-than-expected, we’ll actually see a mortgage rate upswing. This is partly because as folks get back to work, the economy can support the payment of higher mortgage rates.
Last month’s report showed that there were 539,000 jobs lost in April as opposed to general expectations of a 610,000 loss, representing the smallest job loss since October.
Even though the Unemployment Rate moved higher and hit a 26-year high of 8.9% in April, this is a lagging indicator, and many other data points have indicated that the worst could be over for the job market. It will be important to see if the most recent numbers continue to move in that direction.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bond prices and home loan rates were able to end the week on an improving trend after record supply caused them to worsen dramatically midweek. I will be watching closely to see if Bonds can continue to climb their way out of last week’s free fall.
More working Americans means more consumer spending and spending makes up two-thirds of the economy.
Markets expect that another 550,000 workers lost their jobs last month, raising the 12-month total to 5.65 million.
Between Monday and Friday, a number of Federal Reserve members will be speaking publicly, including Fed Chairman Ben Bernanke. Each speaker’s statements, of course, can influence mortgage rates as well.
Overall, markets remain volatile and mortgage rates are jumpy. If you find a rate that fits your budget and with which you can be comfortable, consider locking it in before the news gives the rate reason to change.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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