Mortgage Market - Week of April 28, 2008 - and rates for April 29, 2008
Market Comment - Week of April 28th, 2008 -
Mortgage bond prices rose last week pushing mortgage interest rates lower. Oil prices fell the first portion of the week, which helped bonds rally. Unfortunately, some pipeline shutdowns ignited inflation fears Thursday and Friday causing bond prices to fall and rates to rise, erasing a lot of the earlier improvements. Stocks remained volatile with some optimism despite data that showed the economy continued to struggle.
For the week, interest rates on government and conventional loans fell by about 3/8 of a discount point.
The Fed meeting Wednesday will be the most important event this week. Look for reactions to the data prior to the meeting to be heightened. The post-meeting data releases the later portion of the week may result in slightly diminished reactions but still have the potential to cause mortgage interest rate volatility.
Economic Factors |
Economic Indicator | Release Date Time | Consensus Estimate | Analysis |
Consumer Confidence | Tuesday, April 29, 2008 | 62.0 | Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates. |
ADP Employment | Wednesday, April 30, 2008 | Down 55k | Moderately Important. A different survey of employment. Weakness may help rates improve. |
Q1 Advance GDP | Wednesday, April 30, 2008 | Up 0.4% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
Q1 Employment Cost Index | Wednesday, April 30, 2008 | Up 0.8% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
Fed Meeting Adjourns | Wednesday, April 30, 2008 | 25 basis point cut | Important. Most expect the Fed to cut rates, but volatility may surround the adjournment of this meeting. |
Personal Income and Outlays | Thursday, May 1, 2008 | Income up 0.4%, Outlays up 0.2% | Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates. |
Employment | Friday, May 2, 2008 | Unemp. @ 5.2%, Payrolls -80k | Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates. |
Factory Orders | Friday, May 2, 2008 | Up 0.4% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
Fed Focus
The Fed has been walking a delicate line of trying to stimulate the economy without stoking inflation too much. Unfortunately the Fed is faced with continued signs of economic weakness amid rising price pressures. Most analysts believe the Fed's biggest worry is the stumbling economy and will therefore cut rates again this week by 25 basis points. People often hear that the Fed is cutting rates and believe that mortgage interest rates will follow suit. This is usually not the case in the short-term as recent history shows. Mortgage interest rates have spiked higher following most of the recent rate cuts.
Remember, the Fed cuts rates to spur the economy. This is usually seen as positive for stocks at the expense of bonds. While nothing is set in stone and reactions can vary, floating into the Fed meeting is risky. The Federal Reserve has direct control over the level of short-term interest rates. The Fed's influence over longer-term interest rates is less certain. A cautious approach to float/lock decisions is prudent heading into the Fed meeting this week.
Current Mortgage Rates as of 4/29/08 are listed below
| Loan Type | Rates | APR |
|---|
| 30 yr fixed | 5.8 | 5.94 |
| 15 yr fixed | 5.39 | 5.61 |
| 3/1 ARM | 5.38 | 5.65 |
To find your Perfect Home contact Jake Lee 843-240-0431 or visit his website at www.SCRealEstatePartners.com