Interest rates for buying a home on the Palos Verdes Peninsula moved up about a tenth of a point this week.The following are excerpts from the newsletter on interest rates published by HSH Associates :
"Although the economy isn't firing on all cylinders at the moment, it is yet an open question as to whether it is using enough of them as to warrant a move by the Fed in December.
The typical turn-of-the-month cascade of data showed important strength in several key economic areas. Given that the Fed has made it quite clear that data will rule the decision-making process, it's of little surprise that markets reacted by pushing interest rates higher. Whether corroborating data over the period between now and the December FOMC meeting will support this higher level of rates remains to be seen.
Regardless of the durability of the trend, mortgage rates moved higher this week and are poised to continue on that path next week.
The big market mover was October employment report. The market's supposition was that perhaps 190,000 new hires took place during the month, an improvement from the soft levels of the last couple of months and closer to trend growth. Instead, the report was a near blockbuster, with 271,000 new jobs added, a decrease in the official unemployment rate to a flat 5 percent, and a pick up in wage growth to an annualized rate of 2.5 percent, the fastest pace in about 6 years.
Coupled with an already-recovered stock market and diminished financial market turbulence in general, this is perhaps the clearest signal that the slowing of China's economy and the rollicking equity markets of late summer have not had more lasting impact on the economy. This could give the Fed enough confidence in the outlook to provide reason sufficient to make a move in December. However, one month isn't a trend by any means, but it does move the needle in terms of a likelihood of a change
So around we go again. Especially weak growth in the beginning of the year fostered the year's lowest mortgage rates, and put the Fed on hold. Stronger growth in the middle of the year saw rates rise to 2015 highs, but a cautious Fed didn't move in June, and by the time September rolled around, growth had softened up again to its current 1.5 percent GDP estimate. October's come and gone, and it would seem we're again seeing a pick up in growth, putting the Fed back "in play", and mortgage rates are rising along with generally improving growth and increased prospects for a move by the Fed before 2015's done.
Although the calendar seems to be flipping fast of late, there is still a decent bit of year yet to go, and many economic questions yet to be answered. From a place closer to the year's lows than not, mortgage rates have firmed up this week and will do so again next week, probably moving us closer to the year's highs than we've been in some time, which is to say levels last seen in August or July.
In this market, bumps in rates tend to kill off refinance activity, which is largely sated, anyway, but should have no significant impact on home purchases. At all times, it bears remembering that while no one wants to see an increase in their monthly cost, the difference in a monthly payment from the the 3.86 percent of two weeks ago and the 4.07 percent we'll probably hit next week is only about $12 on a $100,000 loan, hardly the stuff of grave concern.
With Friday's employment-led rise in Treasury yields, there is still some yet-urealized lift in rates to be expected. As per the above, we think we'll see an 11 basis point rise in rates by the time next week is through, as there's little fresh data due out to offset the uptrend of this week."
The following are interest rates quotes from American California Financial:
|30 Yr Fixed FHA|
|Conforming 30 Yr Fixed up to $417000|
|Conforming Jumbo 30 Yr Fixed $417001 - $625500|
|Jumbo 30 Yr. to $1.5 Mil|
|Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)|
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