Mortgage Interest Rate Update 3-28-2011 + Projected Trends & Today’s Best Mortgage Rates & Mortgage Quotes
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The Mortgage Street Smarts of where mortgage interest rates are going (and why):
The following information is current as of Monday 3-28-2011 and will help you understand todays best mortgage rates. If you are a Buyer/Borrower who is still on the fence (or if you are a Real Estate Agent attempting to educate your “on the fence” Buyer), please review these trends and secure an historically low interest rate before it is too late.
The market closed Friday with a WORSENING to pricing (as indicated by the chart below). Note that any movement that exceeds 25 basis points is significant (and will typically warrant a pricing adjustment by most Lenders). Friday’s WORSENING resulted in a change of 9 basis points (bps).
The following chart shows the market activity thus far today (hint: upward activity is good, downward activity is bad):
The following chart shows market activity over the past 10 days (hint: green is good, red is bad):
The following chart shows market activity over the past 1 month:
Daily Interest Rate Snapshot (sample of rates from one of the country’s largest Lenders…individual pricing will vary based on specific Borrower qualifications): NOTE: This Lender has quoted a 1.00% Origination Fee (1 Point) to accompany this pricing. It bears noting that this chart does not necessarily represent todays best mortgage rates.
Market Commentary
Analyst (Lou Barnes):
The financial world is gradually relaxing from immediate fears of Japan and the Middle East. As stocks recover some of their fright losses, bonds are as usual the reverse: the 10-year T-note is back up to 3.40% (from 3.55% pre-panic, and 3.15% at brown-stain); mortgages didn’t move much and are still hanging in just below 5.00%.
The failure of these markets to snap all the way back is a reasonable reflection of new economic data. February orders for durable goods surprised on the far downside: expected to rise 1.1% they fell .9%, and there was no distortion by volatile sectors.
Housing data are numbing. Sales of existing homes were forecast to fall 4.5% in February, but dumped 9.6%, the median sales price down to the $156,100 last seen in 2002. The guesstimate for sales of new homes was a rise of 1.0%, and instead they collapsed 16.9% from January, 15% year-over-year, to an annual rate of 250,000 units, the lowest since records began. The usual idiots found the new-home crash good news, a reduction in supply, but fail to see that their price/absorption fantasy model does not correspond to a real-world housing market in a lot of trouble.
New census data helps to fill in the actual housing picture. Based on the most recent three taken, 1990, 2000, and 2010, US population grew at remarkably steady rates in the ‘90s and ‘00s, a little more than 30 million souls each decade. Total housing units, as all would expect, grew disproportionately in the ‘00s, 15.8 million units versus 13.7 million in the ‘90s, but not extreme versus the population gain.
The most striking numbers: vacant homes. The 1990 census found 10.3 million vacant, and 10.4 million in 2000; in 2010, 15 million were empty. We are clumping together into fewer but larger households to ride out hard times, and the increased vacancy rate is roughly equal to an entire year’s sales of existing homes.
This week has brought a pause in a string of global market/economic/political adventures, each one damned-if-we-do, damned-if-we-don’t, and all unstable. Their resumed movement — soon — will say a lot about the rest of the year.
Europe is pulling farther away from resolution of Club Med debt: Germany, Finland and Holland are turning inward, and Club Med is past the limits of austerity. The rich states want the others to repair themselves, no matter how long or great the sacrifice; but Club Med holds hostage the banks of the rich that hold their debt. The next crisis could produce a real fix, or blow it up altogether, but they’ve run out of shin plaster.
China is fighting its first big inflation since the Great Opening thirty years ago. The fight is by traditional means, the PBOC tightening credit: no modern nation has defeated a true wage-price spiral except by creating recession and unemployment. Whether the central bank has the political support to inflict the pain, we’ll see; and see the consequences of even a minor “growth recession” rippling far outside China.
Emerging Economies will be the first to learn how things go in China. Hyperbolic growth there has sucked every imaginable resource from the emerging world, making all a tad overconfident. As China’s curve inevitably flattens, a healthy thing, we and the emergings will learn their true baseline economic strength.
The Middle East for the first time in a century or more has begun to exercise control of its own affairs, the internal politics of its states and peoples moving faster than the West can intervene, even if it had the wisdom and power to do so. The North African revolutions are relatively benign, but the farther east that instability rolls, the more it will feed on itself in most unpredictable ways.
UK, brave UK, simultaneously devaluing the pound, slashing spending, and maintaining monetary ease, now must suffer rising prices. NOT inflation, as incomes are relatively flat; prices rising versus fixed incomes is the self-inflicted fall in standard of living necessary to dig out after a big party. Just as across the pond….
The US faces exactly the same issues as the UK, plus one. The UK has understood that recovery is impossible without credit. We are still stuck in a circle of flagellation: credit got us into this, therefore is bad; better to pretend to recover than restore credit.
For more information on topics like this, please feel free to visit www.MortgageStreetSmarts.com (an educational resource for Borrowers, Real Estate Agents, and Financial Professionals). Educational content provided by:
Jason E. Gordon
Residential Mortgage Specialist
CMPS, CDPE, NMLS 259027
Office: 619-200-8031
Email: info@MortgageStreetSmarts.com
Online Application www.MortgageStreetSmarts.com
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