Mortgage rates improved very slightly in Atlanta last week. There were few surprises in the economic news and little in the way of guidance for a direction on rates. The only news of note was a release of the Fed meeting minutes which appears to indicate that the long string of rate hikes may soon be ending.
This week's major news releases occur on Tuesday and Thursday. Tuesday's release of the consumer confidence and Thursday's initial jobless claims will provide the most volatility for the week in the bond markets.
We continue to recommend that our customers maintain a philosophy of locking their loans as soon as possible. The outlook for the forseeable future indicates that rates are on the rise.
This past week saw yet another 1/8% increase in mortgage rates in Atlanta. We are currently on a steady trend in the wrong direction. We are recommending to all of our clients at this point to lock in their loans as early as possible. Even if your closing is 90 days out, it still makes sense right now to pay for the exteneded lock. If you are considering refinancing a 3/1 ARM that you got back in 2003, then now is the time. Do not expect fixed rates to head lower anytime in the near future.
What drove the rate increase last week? Mostly news from company earnings reports. This is the 12th quarter in a row where the S&P500 has seen double digit earnings growth. This is putting more money in the pockets of workers, driving more demand for goods, and finally causing an inflationary environment. Bond investors do not like inflation, so this drives bond prices lower. The end result is that mortgage rates will continue to climb until it becomes clear that inflation is under control.
This week we will get numbers on both the PPI and CPI as well as crude oil inventories. The biggest day is Wednesday before the market opens with the CPI report being released.
Atlanta Mortgage Rates were up again last week about another 1/8%. Most of the damage was done on Friday after the latest employment reports were released. Essentially, the employment news came in as expected. The bond market briefly breathed a sigh of relief before news from Japan came in and caused bond prices to fall rapidly on Friday morning.
Rumor in Japan is that the Japanese equivalent of the Federal Reserve is going to begin a campaign to increase rates on Japanese bonds. This is bad news for US bonds as many of the buyers of our bonds are foreign investors. As other countries raise the yeilds on their bonds, ours become less attractive. A similar situation developed earlier this year with European bonds.
The big news this week will be Thursday morning's Retail Sales report. If things continue to heat up in the retail sector, expect another week of mortgage rate increases. We anticipate rates will continue to move upward until we see consistent news that the economy is slowing….
Atlanta mortgage rates were up about 0.125% last week after new Fed Chairman Bernanke flexed his muscle for the first time. This move was expected, however, Bernanke's comments regarding Atlanta mortgage rates were up about 0.125% last week after new Fed Chairman Bernanke flexed his muscle for the first time. This move was expected, however, Bernanke's comments regarding the possibility of future hikes came a something of a surprise. It seems some of the economic news over the past 6 weeks since the prior meeting of the Fed has let the board to worry that our economy may be continuing to heat up despite their efforts to cool it off.
The coming week's big release will be Friday's job numbers report. A healthy increase in the number of jobs could indicate further trouble for the bond market. If investors take the job numbers as a sign the economy is contuing to expand, this could mean investors will move more money over from their bond investments to stocks. This causes the bond prices to fall and in turn an increase in yield. That spells higher interest rates for homeowners.
