Rate Watch
Mortgage rates rose slightly last week, but all-in-all it was pretty tame. Freddie Mac reported in their weekly survey that rates on the 30-year fixed-rate mortgage averaged 6.62 percent, up from the previous week’s 6.60 percent. The 15-year fixed-rate mortgage followed and rose to 6.23 percent, up from 6.20 percent the previous week. This was the 8th time in the past 9 weeks that the survey reported rising rates.
Short-term products moved in the opposite direction. Rates on one-year adjustable rate mortgages averaged 5.61 percent, down slightly from the previous week's 5.62 percent.
Last week's GDP revision had the biggest effect on mortgage rates. GDP was revised higher to a 5.3% growth rate for the first quarter of 2006. Although, this revision was slightly lower than expected, there is concern that economy might have grown to fast. If the economy does overheat, it could lead to higher inflation. However, economic growth is expected to slow slightly, which could lead the Fed to halt their rate hiking bonanza. For this reason we did not see mortgage rates rise too much on the week.
Even though it is a short one, this week should be fairly exciting. Tomorrow the Fed will release their minutes from the previous FOMC meeting. The minutes are a detailed transcription of the discussion during the last Fed meeting and they will be eagerly scrutinized for clues about future policy. On Wednesday and Thursday, the two big national manufacturing indexes, the ISM and the NAPM-Chicago, are on the schedule. These reports will give us insight into the health of the Manufacturing sector. And last but not least on Friday, the biggest economic data of the month will be revealed: The Employment Report. The health of the labor market is perhaps the single biggest factor in the performance of the economy. Early estimates are for about 175,000 new jobs. If borrowers are able, they should definitely lock rates prior to the release of this report. The Employment report can cause big swings in the mortgage rate market, and nobody wants to be on the wrong side of it.
posted by Vincent Biondillo @ 8:56 AM
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