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Mortgage Market in Review – July 20, 2015

Market Comment

Mortgage bond prices finished the week higher which put downward pressure on rates. Rates were negative the first portion of the week tied to a Greek debt deal. Rates were under pressure from news that Greece capitulated to creditor demands. Trading was mostly positive the rest of the week amid mixed data. Retail sales, an indication of the strength of the consumer, fell 0.3%. This was the first drop in four months. Economists expected sales to rise 0.3%. Sales figures for the previous two months were also reduced which suggested GDP growth may be softer than previously expected. Weekly jobless claims were 281K versus the expected 283K. The Philadelphia Fed index of manufacturing activity was 5.7 versus the expected 12.5 reading. Mortgage interest rates finished the week better by about 5/8 of a discount point.

LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
FHFA House Price Index Wednesday, July 22,
10:00 am, et
Up 0.7% Moderately Important.  A measure of single family house prices.  Weakness may lead to lower rates.
Existing Home Sales Wednesday, July 22,
10:00 am, et
5.4M Low importance.  An indication of mortgage credit demand.  Significant weakness may lead to lower rates.
Weekly Jobless Claims Thursday, July 23,
8:30 am, et
278K Important.  An indication of employment.   Higher claims may result in lower rates.
Leading Economic Indicators Thursday, July 23,
10:00 am, et
Up 0.4% Important.  An indication of future economic activity.  Weakness may lead to lower rates.
10-year Treasury TIPS Auction Thursday, July 23,
1:15 pm, et
None Important.  TIPS will be auctioned.  Strong demand may lead to lower mortgage rates.
New Home Sales Friday, July 24,
10:00 am, et
608K Important.  An indication of economic strength and credit demand.  Weakness may lead to lower rates.

Mortgage Professionals

Obtaining a mortgage is often a confusing task that can also lead to frustration.  The reason for the confusion is due to the fact that mortgage financing is complex.  The good news is that this complexity provides consumers with options and choices best suited to fit their needs.

 

Everyone’s financial position is unique.  Some people have large cash reserves that can be used for down payments while others want to get into a home with little or no money down.  Credit ratings vary from person to person.  In addition, future plans vary.  Some people plan on staying in their home for the rest of their lives while others only plan on staying for a few years.  These facts alone make comparing your mortgage to your neighbor’s based on rate alone a flawed endeavor, yet many people attempt to do so.  Admittedly, everyone wants a good deal.  Keep in mind that comparing rates is just one component of the entire mortgage.  Other variables include the term, down payment requirements, income qualifications, credit ratings, reserve requirements, current debt, prepaid points, and many more.

 

A mortgage professional is able to take all of these variables that are unique to each individual and help a person obtain financing that works best for their situation.  The service they provide is time consuming and complex.  However, the rewards of dealing with a professional carry forward throughout a borrower’s life.  Making wise financial decisions today helps to pave the way for a safe and secure future.

 

Mortgage interest rates currently remain historically favorable.  There is much uncertainty about the future of the economy. A cautious approach to lock decisions is wise.


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