Bay Area Mortgage Rates Remain Volatile This Week : March 26, 2012

Bay Area Mortgage Rates Remain Volatile This Week : March 26, 2012

Mortgage markets carved out a wide range last week, eventually closing slightly worse. Mortgage-backed bonds sold off early in the week on rising investor sentiment. Then, they reversed higher on prepared remarks from Federal Reserve Chairman Ben Bernanke, which tempered Wall Street optimism.

When bonds prices rise, mortgage rates fall.

Conforming and FHA Mortgages

Conforming and FHA mortgage rates in California edged higher on the week, and remain at a 5-month high.

According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage is now 4.08% and the 15-year fixed rate mortgage is now 3.30%. Both loan types require an accompanying 0.8 discount points, plus a full set of closing costs.

1 discount point is equal to one percent of your loan size.

Last week’s conforming mortgage rates represent a sharp increase from the week prior when rates for the 30-year fixed rate mortgage and 15-year fixed rate mortgage averaged 3.92% and 3.16%, respectively.

If you’ve been shopping for a 30-year fixed rate mortgage, the interest rate increase added $9.22 to your monthly payment per $100,000 borrowed.

Mortgage Rates This Week

We can’t know in what direction mortgage rates will move this week, but we can be certain they’ll be volatile. Wall Street is suddenly on edge, unsure of whether the economy is improving as recent data suggests, or if the Federal Reserve is correct in that threats to growth persist. Fed Chairman Ben Bernanke was up early this morning and already gave a speech on the labor markets. He said that while he is encouraged by the Unemployment Rate declining to 8.3%, “continued accommodative monetary policy will be needed to make further progress.” Translation: low rates for a long time and maybe even QE3.

The week’s data schedule is as follows :

  • Monday : Pending Home Sales Index
  • Tuesday : Consumer Confidence; Case-Shiller Home Price Index
  • Wednesday : Durable Goods
  • Thursday : Initial Jobless Claims; GDP
  • Friday : Personal Income and Outlays

In addition, there are 6 Federal Reserve speakers scheduled for the week, including Chairman Bernanke. Expect mortgage rates to change frequently throughout the week as Wall Street wrestles with data and rhetoric.

Although mortgage rates spiked last week, historically, they remain low. If you’re nervous that rates may rise more, consider locking something in.

Technical Trends This Weeks Market

Technically, the Bond remains on a “step” of the Down Escalator. Short-term, clients should lock on any price improvements, as the Bond at best has moved sideways over the past couple weeks. But longer-term, we can try and float, watching to see if the Bond can step off the Down Escalator and move higher. In order for us to be more bullish we must see the Bond break convincingly above resistance at the 100-day Moving Average.

Pay close attention to the potential of more QE3 rumors…that could help push the Bond higher. But when a official announcement is made – Bonds could actually suffer, much like they did when QE2 was rolled out.

 

I’m Here to Help You With Your Purchase or Refinance

I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize on historically low interest rates in 2012. Contact me below today to help you with your purchase or refinance.

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