Understanding Mortgage Rates | dripp inc | Home Equity | Refinancing and Remortgage Guide

Good Afternoon,

We saw a big surprise in this morning’s bond trading after American International Group Inc (AIG) reported they would cut insurer’s ratings.  The Dow Jones industrial average has fallen more than 200 points today due the increased weakness in the US financial sectors and the bond market has been rallying. 

Our economy is not even close to getting out of the woods yet, in fact it seems like we are continuing to get ourselves even more lost sometimes.  Also, existing home sales rose more than expected last month by 3.1%, but the number of unsold properties are currently at the highest level we have ever experienced as well.  

Rates improved today because of all this news.  The volatility will most likely continue throughout the week.

Here’s the inside Dripp…

Scheduled Reports for the Week:
TUESDAY – Consumer Confidence Index (CCI): This measures exactly what it suggests, Consumer Confidence.  This index helps to communicate the consumer’s willingness to spend to investors.  What that means to you, as the consumer, is simple: a lower than expected reading can mean lower rates and a higher reading can stimulate an increase in mortgage rates.  Current Forecast: 53.0 reading

TUESDAY – July’s New Home Sales: This measures the demand for mortgage credit and the strength of the housing sector.  Usually has little affect on mortgage interest rates.

TUESDAY - FOMC (Federal Open Market Committee) meeting minutes: This can potentially be a big stimulant as what to expect with mortgage rates.  What does the Fed think about inflation now and what will their next move be?  Will they hint to increasing rates to combat inflation soon?  Or will they still hold a somewhat insecure position

WEDNESDAY – July’s Durable Goods Orders: This measures orders for big-ticket items for manufacturing companies.  This is yet another report that can greatly influence mortgage rates. A 0.2% rise is expected.

THURSDAY – A revision of the 2nd quarter Gross Domestic Product (GDP): Last month’s numbers will be revised and it is expected that the annual expected growth rate will be increased to 2.7%.  Anything can happen here.

FRIDAY - University of Michigan’s Index of Consumer Sentiment: measures the consumers’ feeling about their own finances.  If people are not confident in their finances they are more likely to not make large purchases, which causes investors to place their money into the safer bond market.  YES, that will help to lower mortgage rates.

Simply Put:  Put on your protective gear, strap on your seatbelts and prepare yourself for a major week for mortgage interest rates. As you can see from the above, this week can really set the tone for next month’s interest rate direction.  Rates are better than Friday today, so it could be a good opportunity for people to get back into the refinance game.