Mortgage rates have continued to improve throughout this year, and it should stay that way through the summer. After continuing to rise in three consecutive weeks, mortgages rates began to shift lower. FHA and VA mortgage rates moved lower than last week’s rate, and so did conventional rates. The number of U.S. homeowners that are eligible for a home refinance is increasing due to these rates. The FHA Streamline Refinance and VA Streamline Refinance programs are multiplying, as well as a rate-and-term refinance have begun to grow too. As we spoke about last week, with rates still remaining south of four percent, it is a buyers market, as well as favorable for refinancing. Buyers can afford up to ten percent more home for their dollar than compared to last year.
Mortgage rates are still sitting in the three percent range, even after the 30-year conventional fixed rate dropped one point last week to 3.84% nationwide. As well as the 30-year dropping, the 15-year rate moved downward 2 points settling in at 3.05%.
With the holiday weekend shortening the week’s open, shoppers are finding that rates are somewhat better than predicted. The reason behind these rate changes is due to the Federal Reserve publishing the minutes from their most recent meeting in late-April. The minutes suggests that the Fed Fund Rate may remain at a near zero percent for longer than Wall Street and other analysts originally predicted.
The Fed came out and announced that the first-quarter growth was slower than expected. The release of the minutes sparked a rally around mortgage-backed securities. This rally helped to lower consumer rates approximately one-eighth of a percent. Currently today’s rate is at 3.75%, with zero-closing cost mortgage rates slightly higher.
Even though the national average for specific surveys may be coming in at 3.75%, it mainly focuses in on the “prime borrower”. A prime borrower is an individual who is able to verify their income, hold a credit score of 740 or greater, and place a down payment of 20% or more on their purchase. Borrowers who do not carry all of these requirements will have access to nominally higher rates. Another factor in how your mortgage rate quote may be different than the national average is through your geographic location. Currently rates are lower in the western states, such as California, Oregon, and Washington. In return, rates are highest for borrowers in the Southeast, including Florida, Georgia, and Alabama. Most of this information applies to conventional loans, but if you are interested in an FHA loan or a VA program, read another blog of ours giving tips on the right loan for you: http://www.nshmortgage.com/u-s-lenders-approve-more-applications/
This week is bringing a strong economic calendar along with it. The number of notable influences including the data from housing combined with the release of GDP, which require a shopper or mortgage recipient’s attention. However, going away from housing and GDP, the dollar to Euro ration may affect mortgage-backed securities and the value of rates. The U.S. dollar is linked to mortgage rates because it is the currency in which the mortgage bond is denominated. When the dollar rises in value compared to the Euro, the value of holding a mortgage-backed loan rises along with it. This in turn increases demand, which pushes down the yield.
There are multiple Federal Reserve members scheduled to speak publicly this week. Their comments about the future of the domestic economy; and how the Fed may alter the Fed Funds Rate will change the value of the U.S. dollar versus other currencies.
This week’s economic data will affect rates, too.
The complete economic calendar for the week follows:
- Monday: Cleveland Fed President Loretta Mester speaks; Federal Reserve Vice-Chairman Stanley Fischer speaks
- Tuesday: Federal Reserve Vice-Chairman Stanley Fischer speaks; FHFA Home Price Index; New Home Sales; Richmond Fed Manufacturing Survey; New Home Sales; S&P Case-Shiller Index; Richmond Fed President Jeffrey Lacker speaks; Durable Goods
- Wednesday: 5-Year Treasury Note Auction
- Thursday: Jobless Claims; Pending Home Sales Index; San Francisco Fed President John Williams speaks; Minneapolis Fed President Narayan Kocherlakota speaks; 7-Year Treasury Note Auction
- Friday: GDP; Consumer Sentiment
Mortgage rate shoppers should pay special attention to Wednesday and Thursday, when the auction results are announced for the 5- and 7-Year Treasury Notes. Strong demand for the notes will suggest strong demand for dollar-denominated assets, which can be a clue that mortgage rates, will soon drop.
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