The Florida mortgage market picture got a bit better last week as Americans began once again lose confidence in the US economy.
As this happens, traders felt that money was best kept in bonds – which tend to be the investments of choice when things shift towards the “dire” end of the consumer confidence spectrum. Remember – when the economy does well, folks are willing to take on more risk. As such, money flows into stocks (riskier investments) and out of bonds (seen as safer investments). When this happens, mortgage rates go up.
Money shifted out of stocks and into bonds last week, so… mortgage rates went down. It’s the third consecutive week in which rates fell.
In short – when you hear or read about the US economy picking up – RUN, don’t walk to get your mortgage rate locked in!
Mortgage Rate Outlook for the Week of July 13, 2009
This week, 3 key items will hold the collective gaze of Wall Street traders:
One: Earnings Season reports.
We’ll see quarterly earnings reports this week from “Big Banks” JP Morgan Chase, Bank of America and Citigroup. If the news is good, and balance sheets look healthy – traders will be willing to up their risk, sparking a stock market surge similar to what we saw last quarter. This would be bad for mortgage rates.
Two: Tuesday’s Retail Sales Report
The second item markets will be watching is economic data. In addition to inflation-related data like the Consumer Price Index, markets are watching for Tuesday’s Retail Sales report.
Retail sales are a key economic indicator because consumer spending accounts for two-thirds of the economy. If the data is weak, mortgage rates should benefit.
Three: Wednesday’s FOMC Meeting Minutes
Wednesday we receive last month’s Federal Open Market Committee meeting minutes, which should provide some useful insight.
The FOMC minutes are useful because they often afford us a behind-the-scenes ticket to the Carnival Show known affectionately as “The FOMC Committee Meeting.”
For this edition, we may gain more insight into the conversation and debate surrounding the Fed’s decision to hold the Fed Funds Rate near 0.000 percent, as well as its decision to refrain from purchasing additional treasury securities on the open market.
Mortgage rates remain volatile. As such, if you’re actively shopping for a mortgage rate, consider that mortgage rates have been falling for the past 3 weeks and may be due for a reversal.
All it would take for that to happen is for this week’s economic data to show just a little bit of strength. Should this happen, expect traders to pile back into stocks and for Florida mortgage rates to suffer.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 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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