Mid-October Preview : What Will Mortgage Rates Do Next?

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 Mortgage Rates : What will mortgage rates do this week?


October 14th, 2013 - Dan Green, themortgagereports.com
Mortgage markets worsened a bit last week. One week after posting the fastest rate-drop in more than 4 years, U.S. mortgage rates edged higher between Monday and Friday.  
During the trading week, Fannie Mae's mortgage-backed securities (MBS) changed +17/32 last week. Fannie Mae MBS are tied to conventional mortgages and conventional mortgage rates. Programs subject to Fannie Mae bonds include the HARP 2.0 refinance program and the Conventional 97 mortgage.
Bonds issued by Ginnie Mae were mostly a little bit worse, moving -14/32. Ginnie Mae bonds are linked to mortgage rates for FHA and VA loan products. Rates for the FHA Back To Work program and the VA IRRRL program increased last week.
This week, without a government shutdown resolution, mortgage rates may fall.

15-Year Mortgage Rates Dropping Quickly

According to Freddie Mac's weekly survey of 125 banks nationwide, the conventional 30-year fixed rate mortgage rate now average 4.23% -- near the 4-month low.
Not since June have mortgage rates been as low as are they are today. Home buyers have regained some their lost purchase power from the summer; and homeowners are benefiting from a "second chance" to refinance.
At today's rates, the typical HARP mortgage saves 27 percent. That's a big number. Furthermore, for homeowners looking to own their home sooner, current 15-year mortgage rates are incredibly low as compared to 30-year ones.
The 15-year fixed rate mortgage rate now averages 3.31% nationwide -- 0.92 percentage points lower than a comparable 30-year product which is more than double the historical interest rate spread.
At today's rates, mortgage applicants using 15-year mortgages will save $50,000 in mortgage interest over the life of their loan for every $100,000 borrowed. 
A home buyer borrowing at the conforming loan limit of $625,500 in Orange County, California, therefore, will save more than a quarter-million dollars by going with a 15-year loan. 
Even if 2014 Conforming Loan Limits get congressionally-reduced, the math on the loan still works. The 15-year loan program remains a relative bargain.

Predicting This Week's Mortgage Rates


Mortgage rates have moved quickly this month, making it difficult to shop for the lowest mortgage rates possible. This week, rates could be equally jumpy.
As a rate shopper, the most important thing to remember is that this month's government shutdown has delayed the release of economic data including, but not limited to, the Non-Farm Payrolls report, the Retail Sales report, and key inflation reports.
This is a big deal because, several weeks ago, the Federal Reserve reminded us that it's dependent and that the future of QE3 and other stimulus would depend on the general health of the U.S. economy.
QE3 is linked to low mortgage rates.
It's only known truth is that the longer the shutdown lasts, the weaker U.S. economic output will be. The government shutdown is estimated to cost $160 million daily, with unknown long-term costs related to loss of business and consumer confidence.
This week, the shutdown may end. Until it does, however, markets will search for clues for what's with QE3 and U.S. mortgage bonds and there will be no shortage of places to look between now and Friday.
The calendar of events for Fed member speeches is on full-tilt : 
  • Monday : Fed Chairman Ben Bernanke speaks
  • Tuesday : Fed Members John Williams, Richard Fisher and William Dudley speak
  • Wednesday : Fed Member Richard Fisher speaks
  • Thursday : Fed Members Richard Fisher, Charles Evans, Esther George, and Narayana Kocherlakota speak
  • Friday : Fed Members Daniel Tarullo, Charles Evans, and Jeremy Stein speak
In addition to this week's scheduled Fed speakers, there are non-government-published reports which may affect this week's mortgage rates, including Wednesday's National Association of Home builders Housing Market Index. 

Double-Check Today's Low Mortgage Rates

As mortgage rates have retreated this season, opportunities have opened for buyers in all 50 states. The same is true for the millions of still-eligible HARP 2.0 homeowners nationwide.
See how low today's rates are. Get started with a quote online. It's fast, it's free and there's no obligation or cost.

> Read the original article on www.themortgagereports.com here.  

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