Recent downward revisions of GDP for 2001 and first quarter 2002 suggest that the economy faces weak growth, |
Recent downward revisions of GDP for 2001 and first quarter 2002 suggest that the economy faces weak growth. This led to anticipation that the Fed will reduce overnight interest rates by the end of the year, if not sooner. That expectation, in turn, has created a boon for potential and existing homeowners in the form of lower mortgage rates. |
Recent economic indicators show a lackluster economic climate. And that led to the surprise 50-basis-point rate cut by the Fed yesterday. |
Recently released employment figures point solidly towards a slowdown in economic growth. That, in turn, alleviated upward pressure on interest rates, allowing mortgage rates to slip a little more, |
Recently released employment figures point solidly towards a slowdown in economic growth. That, in turn, alleviated upward pressure on interest rates, allowing mortgage rates to slip a little more. |
Reconstruction efforts are going to place upward pressure on construction material, and this could add another two percent to three percent to new home costs in the coming months, but should be balanced out by slightly lower mortgage rates. |
Release of the May Federal Open Market Committee (FOMC) minutes the week reinforced the notion that inflation in the economy in the first three months of the year was contained and upward price pressure in the near-term seems unlikely, |
Renewed concern over the threat of inflation pushed up long-term mortgage rates, while the most recent Fed statement caused short-term rates to float upwards, |
Responding to a weak labor market report that showed November job growth to be far less than had been anticipated, long-term yields -- and that includes mortgage rates -- reversed last week's hike and fell to the previous week's level. |
Saving half a percentage point in interest accumulates over time. |
Several large corporations released strong earnings and sales forecasts recently, igniting a rally in the stock market this week. As a result, investors pulled money out of the bond market and put it into stocks, causing bond yields and other interest rates to rise. Mortgage rates followed suit, to a lesser degree. |
Short-term rates, though, may be another matter, since the Federal Reserve is expected to continue raising its target for the federal funds rate at least a few more times this year. |
Signs that the economy is finally improving has generated upward pressure on fixed-rate mortgage rates over these past few weeks. Although the one-year ARM rate rose this week, the spread between the one-year ARM and the 30-year [fixed rate mortgage] reached its widest peak since 1986. |
Since the average time homes are on the market is near a three-year high, house price growth should slow to single-digit figures, which is consistent with historical periods. |
Slower economic growth this quarter and little or no inflation worries allowed rates to drift downward these last few weeks to the benefit of homebuyers, |