There was little in the way of economic news last week to move the bond markets, however, continued fear of inflation has pushed bonds lower for the last 13 straight sessions. Again, Atlanta mortgage rates were up slightly for the week.
The outlook for this week, is for a week of volatility. There are a number of reports which will move bonds this week. Most attention, however, will be focused on Thursday's meeting of the Fed. Also of note will be Tuesday's consumer confidence and existing home sales reports. Again, we continue to take a stance of locking rates ASAP as we move through this turbulent time in the mortgage and bond markets.
Indications right now show rates continuing to rise through the end of this year, with an easing of rates starting early in 2007. This is, of course, subject to change as inflation news unfolds.
Mortgage rates in Atlanta, Georgia were up between 1/8% and 1/4% over the past week. Last week saw very bad news on the Consumer Price Index (CPI) front, with prices rising 2.4% year over year. The Fed quickly made it known that they were not happy with this number and it looks likely that they will raise rates for the 17th consecutive time late this month. Also, the early August meeting looks like there will be another rate hike at that time.
With what has seemed like a steady stream of bad news over the past month, some are saying that this 17th hike may actually be a 1/2% hike. With that kind of uncertainty looming, we urge all of our customers to continue to lock in their rates as early as possible. Additionally, anyone who is sitting in a 3/1 or 5/1 ARM which is nearing the end of the fixed period, now is the time to lock in the still low 30 year fixed rates.
Little financial news to propel the bond markets last week left Atlanta mortgage rates virtually unchanged. All attention was focused on remarks from Ben Bernanke and the other Fed Governors. Bernanke seems likely to raise short-term interest rates again at the end of this month as he appears to be very concerned about inflation.
Historically, the Fed tends to go too far when increasing rates, especially when there is a new chair. Shortly after taking over in 1987, Greenspan's persistent increasing of the Fed rate is believed to be one of the factors which led to the stock market crash in the fall of 1987.
This week's major news release will come Wednesday morning when the CPI number are published.
Financial news was a mixed bag last week resulting in little change to mortgage rates. The Fed meeting minutes were released showing that there is some dissention in the ranks. Some members indicating they wanted a 50 basis point hike last meeting, some indicating they wanted no hike at all. Looks like they settled in the middle.
Statistics really gave them no new direction last week either. The jobs report showed slower than expected new job growth, but the unemployment rate is now the lowest it's been since 2001.
This week is a slow one. The only report of any note is Thursday morning's initial jobless claims report. However, we are still maintaining a lock early strategy for all of our customers at this point. Rates still appear to be headed steadily upward. We continue to recommend our 60 day lock with the one-time float down option as the appropriate strategy for this environment.
An IRS ruling just handed down seeks to end the tax exampt status of down-payment-assistance programs. Over the past 10 years, these nonprofits have helped about 600,000 families buy homes without saving the 3 percent that the FHA loan program requires. While none of these non-profits have lost their tax exempt status to date, it is highly likely that this loophole is about to be closed.
The FHA loan is very outdated at this point and is long overdue for an overhaul. The feds are now working on doing just that, allowing borrowers to qualify with zero down and many other changes. But why wait?
Fannie Mae and Freddie Mac both have excellent programs available today for borrowers who would have traditionally fallen into the FHA category. Fannie's MyCommunity Mortgage is a favorite of ours. We have found this to be beneficial in most cases over a traditional FHA program. This new product offers:
Better than ever with low mortgage insurance coverage requirements
* 20% coverage for 100% LTV
* 18% coverage for 97% LTV
* 6-16% coverage for other LTVs above 80%
Plus,
* Minimum borrower contribution of $500
* LTVs to 100% for one-unit properties
* Available for two- to four-unit owner-occupied properties
* Flexibility on credit histories
* Extra flexibilities with options to serve teachers, police officers, firefighters, and health care workers, and people with disabilities or a family member with a disability
Call Primacy Mortgage today to discuss your needs for 100% financing in the Atlanta, Georgia area.
