economy

How Gas Prices Are Impacting Mortgage Rates

March 11, 2008

Gasoline prices reached an all-time, inflation-adjusted high yesterday, averaging $3.23 per gallon nationwide. According to GasBuddy.com, this represents a 25% increase in the last 12 months. Higher gas prices are leaving Americans with fewer discretionary dollars to spend and that is playing a role in the U.S. economy’s slowdown.  It’s one reason why mortgage rates have […]

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Looking Back And Looking Ahead : March 10, 2008

March 10, 2008

Between Tuesday and Thursday, mortgage rates rose as much as during any three-day period in recent memory before settling back a bit on Friday’s jobs data. Fourteen speeches from members of the Federal Reserve were partly to blame for the mortgage rate chaos, but several other factors played a part, too. One of the biggest […]

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Recession or Inflation? Even Fed Members Don’t Know For Sure.

March 5, 2008

With Friday’s jobs report looming, mortgage markets are especially skittish about whether the economy is in a recession, or facing inflation. Four Fed speakers Tuesday did little to quell the debate: 9:00 A.M.: Fed Chairman Bernanke stayed on message that foreclosures and falling home values are dragging down the economy. 10:00 A.M.: Fed Vice Chairman […]

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Looking Back And Looking Ahead : March 3, 2008

March 3, 2008

Mortgage rates edged lower last week but it was another wild ride.  Market players continue to deal with competing economic forecasts. When the economy shows signs of brightness — like it did Monday and Tuesday — mortgage rates tend to rise. This is because markets are currently equating growth with inflation and inflation pressures mortgage […]

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As The Fed Funds Rate Falls, 30-Year Fixed Mortgages Rise

February 28, 2008

Federal Reserve Chairman Ben Bernanke testified to Congress Wednesday, alluded to further rate cuts to support an ailing U.S. economy. Already, the Federal Reserve has lowered the Fed Funds Rate by 2.250% since September 2007. The graph at right comes from the Wall Street Journal and it highlights a very important correlation between the Fed […]

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Looking Back And Looking Ahead : February 25, 2008

February 25, 2008

It’s a big week for mortgage markets (again) and that should cause rates to fluctuate wildly (again). The volatility we’ve seen since December has not been for the faint of heart.  Even this past Friday, as mortgage rates were poised to end the week lower, a late-afternoon stock market rally reversed it. In the last […]

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Looking Back And Looking Ahead : February 19, 2008

February 19, 2008

Early last week, mortgage rates rose on strong consumer spending and Warren Buffett’s offer to assume $800 billion in debt from three major bond insurers. Both reports were interpreted as signs of long-term strength in the economy, leading mortgage rates higher for long-term products such as the 20- and 30-year fixed rate mortgage. Meanwhile, Fed […]

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The Effect Of Fed Funds Rate Cuts On Mortgage Rates

February 15, 2008

As mortgage rates lurch higher this week, we have additional proof that cuts to the Fed Funds Rate do not lead to cuts in mortgage rates. Since the Federal Reserve’s surprise rate cut January 22, 2008: The Fed Funds Rate is lower by 1.250% The 30-year fixed rate mortgage is higher by approximately 0.750% Mortgage […]

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How Economic Stimulus Impacts Home Financing

February 13, 2008

President Bush is expected to sign the economic stimulus package today. The package includes tax rebates and incentives for business and its purpose is to jumpstart a stalling U.S. economy. If the package is deemed “effective” by Wall Street investors, we should expect the stock market to rally on the prospects of business growth. The […]

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Looking Back And Looking Ahead : February 11, 2008

February 11, 2008

Mortgage markets are conflicted about the U.S. economy and the confusion is impacting home buyers. If you’ve recently tried to lock a mortgage rate, you’ve probably experienced it personally. On one hand, reports of plunging sales suggest that the economy is slowing more quickly than expected. This is recessionary and tends to be good for […]

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Looking Back And Looking Ahead : February 4, 2008

February 4, 2008

We entered the New Year uncertain of the country’s economic future. With January over, it’s a little more clear. Last week’s data and events helped firm expectations. In the near-term, we can expect weakness: The economy is shedding jobs Consumer sentiment is low Home sales continue to slump nationally In the intermediate-term, however, the picture […]

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The Week In Review (January 28, 2008) : What To Watch For

January 28, 2008

Mortgage rates change from day-to-day, but last week’s volatility was a record-breaker. After drooping through Tuesday and then skyrocketing Wednesday and Thursday, mortgage rates retreated slightly on Friday. By weeks’ end, rates were at their same levels from mid-December. This is in contrast to Tuesday, just after the Fed’s rate cut and before the stock […]

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It’s A Good Day To Have Your Mortgage Adjust

January 23, 2008

When the Federal Reserve lowered the Fed Funds Rate by 0.75% yesterday, it was in response to economic weakness that mounted since its last meeting December 11, 2007. By contrast, the mortgage markets meet every day. Because of this, mortgage rates had already “priced in” the weakness to which the Fed was reacting. This is […]

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The Week In Review (January 22, 2008) : What To Watch For

January 22, 2008

As promised, last week was heavy on data and on drama.  And mortgage rates continued their slide lower. This week, by contrast, is devoid of data and markets are already digesting the Federal Reserve’s surprise 0.750% rate cut this morning. Mortgage rates are falling in response, but not because of what the Fed did as much […]

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Be Thankful Gas Prices Aren’t Keeping Pace With Oil Prices

January 17, 2008

On average, Americans are now paying more than $3.00 per gallon for gasoline.  This is roughly 40 percent higher than the cost of gasoline last January when gas hovered near $2.15 per gallon. Higher gas prices are one reason why the economy is slowing down.  With so many additional dollars being spent at the pump, […]

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Which Leads Which Lower: Mortgage Rates Or The Fed Funds Rate?

January 16, 2008

It’s a point that’s always worth repeating: Ben Bernanke and the Federal Reserve do not control mortgage rates This is particularly relevant today as newspapers, television programs, and market pundits posit that the U.S. is in the midst of a recession. The latest evidence supporting that assertion is that Retail Sales grew at its slowest […]

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The Week In Review (January 14, 2008) : What To Watch For

January 14, 2008

Markets are welcoming the return of cold, hard data this week. Most of last week was spent making sense of Fed speakers, recessionary fears, and a takeover of the nation’s largest lender. This week, we’ll find out if the recent fears of recession are on target, or overblown. The data deluge starts Tuesday with the […]

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Americans Are $6.25 Billion More Wealthy Since September Because Of The Federal Reserve

January 8, 2008

Since September 2007, the Federal Reserve has lowered the Fed Funds Rate by 1.000%. This has caused Prime Rate to fall by 1.000%, too.  This is because the Fed Funds Rate and Prime Rate are directly related. In mathematical terms, the relationship looks like this: (Prime Rate) = (Fed Funds Rate) + (3.000%) So, because […]

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Why It’s Not So Bad That Unemployment Reached Its Highest Rate Since November 2005

January 4, 2008

On the first Friday of each month, the Bureau of Labor Statistics releases key data about the American workforce. The report is officially called “Non-Farm Payrolls” but most people refer to it as the “jobs report”. The jobs report’s influence on markets is palpable for two major reasons: Consumer spending makes up two-thirds of the […]

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$100 Oil Could Mean More Than High Gas Prices For Americans

January 3, 2008

The price of oil briefly touched $100 per barrel yesterday, just short of the all-time inflation-adjusted high of $102.81 in April 1980. According to economic forecasting firm Global Insight, each $10-per-barrel increase in oil prices: Increases gas prices by 19 per gallon Cuts consumer spending by one-third of a percent Reduces employment by 100,000 Adds […]

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