HSH Market Trends

These are the latest HSH National Interest Rate Benchmarks — produced from HSH’s weekly editorial survey of mortgage lenders across the US. Click here for more information. We have long-term statistical sets, too.

Source: HSHAssociates.com, Pompton Plains NJ
1-800-UPDATES   Compile Date: 02/03/2012   ©2012 HSH Associates

Popularity: 1% [?]

January 27, 2012 — The Federal Reserve kicked off its new strategy of clearer communications at the close of January’s Open Market Committee Meeting on Wednesday afternoon. With just a few words, plus some charts, the Fed now expects to keep interest rates “extraordinarily low” for a period up to 18 months longer than the mid-2013 previously in place. Also for the first time, the Fed more officially revealed more explicitly that it will use an inflation target to help control monetary policy.

Armed with this news, and with Fed Chair Bernanke commenting at his news conference afterward that a QE3 is certainly possible sometime this year, markets turned. Mortgage rates were rising somewhat in the early part of the week, goosed by warmer economic news, but reversed course to some degree. Why? If nothing else, it reinforces the idea that the Fed expects the economy to continue to experience sub-par growth which will require additional assistance, and that price pressures are low and will likely remain that way for some time.

HSH.com’s broad-market mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages rose by six basis points (.06%) from last week, climbing to an average 4.28%, closing January just shy of where it began. The FRMI’s 15-year companion increased only two basis points (.02%) to finish the weekly survey at an average 3.55%. Important to homebuyers and low-equity-stake refinancers, FHA-backed 30-year mortgages rose by just a single hundredth of a percentage point to 3.87%, while the overall average for 5/1 Hybrid ARMs increased by two basis points to end the week at 3.06%.

See this week’s Statistical Release and Trend Graphs.

Want to get Market Trends as soon as it’s published on Friday? Get it via email — subscribe here!

Will the Fed start a new program of purchasing Treasuries and Mortgage-Backed Securities? If the economy falters, that would be a consideration, especially given that this year is an election year and getting meaningful fiscal support from the Congress is unlikely. That said, the economy has been generally on an improving bent after suffering considerably early in 2011, with all kinds of weather-related interruptions capped off by the Japan disaster causing disruption. After growing just 0.4% in the first quarter of 2011, the path for GDP has been an improving one, with 1.3% in the second quarter, 1.8% in the third and 2.8% in the fourth, according to the advance report released on Friday. The present rate is solid enough, but insufficient to bring down unemployment very quickly, and with euro-headwinds forming for 2012, the upward march of the economy might be disturbed, and the Fed would feel compelled to act. Should economic growth continue on even a modest upward trajectory, the Fed is more likely to hold off, since these programs don’t come without consequence of inflation or even more lasting market distortion. For 2011, GDP grew by 1.7%, with inflation waning when compared to 2010.

Mr. Bernanke mentioned that he would think it acceptable if inflation ran above the Fed’s 2% level for a time, if it was to promote stronger job growth. That’s fine, but we wonder how the market would react to a Fed who states a goal and then feels it they can ignore it. Admittedly, that’s not much of a problem at the moment when inflation is easing, but should the reverse occur the market might not like it. Inflation is a monetary policy issue; if it runs hot, failing to control it can cause serious damage, and often worse trouble ensues when it must be corralled again.

The Fed’s commitment to a low interest rate policy (and possibly a QE3) is aimed squarely at reviving the housing market. Sales of new homes came in at an annualized rate of 307,000 in December, down by some 7,000 units from November. While it was the worst year for new home sales since records were kept (1963), we have been encouraged by both the stable pattern of sales and also that inventory levels are at record lows (157,000 units built and ready for sale, about 6.1 months worth at the present rate of absorption). With lows of 281K annualized units and highs of 316K annualized, we are closer to the top than the bottom of a weak range, so any increase in demand must be met with new construction.

An amalgam of some 85 economic indicators, the Chicago Federal Reserve’s National Activity Index pointed to a faster growing economy in December. The NAI sported a positive value of 0.17, a nice rebound from a sub-par minus 0.46 in November. The NAI seeks to show whether the economy of growing faster or close than what is considered its natural potential to grow, believed to be about GDP 2.8% or thereabouts. Two of the last three months have been positive where only one six prior to October had been, lending hope that we are gaining some economic traction as we move into 2012.

Some of that traction is reflected in improvements in regional activity. The Federal Reserve Banks of both Richmond and Kansas City weighed in with their January reports, and both found improving conditions in their respective districts. The KC Fed’s indicator moved from a value of -4 in December to a +7 in January, a nice rebound, while the Richmond district moved from a mile reading of 3 to a high-since-March 2011 reading of 12. At least some of that forward progress is no doubt due to a 3% surge in orders for Durable Goods in December, as spending on items designed to last longer than three years has put in two solid months in a row. Business-related spending picked up in the latest report, rising by 2.9%, so there would appear to be some optimism expressed there about the prospects for growth in 2012.

The monthly employment report for January comes next Friday, and everyone is hoping to see continued gains in new jobs created and a decrease in the unemployment rate. Forecasts are for perhaps another 200,000 jobs created, but since claims for new unemployment benefits has been a little higher in January than December we’d expect perhaps 180,000 for the month. There may be some upward revision to December, though. That said, unemployment claims came in at 377,000 during the week ending January 21, a figure about average for the last four weeks.

With slow improvement on the job front you would expect to see the same reflected in the demeanor of consumers. That’s roughly seen in the final report on Consumer Sentiment from the University of Michigan. The final January value of a flat 75 was the highest since February 2011, and continues a fairly steady climb since a summer nadir. On a higher frequency note, the weekly Bloomberg Consumer Comfort Index continues to hold in a very narrow range, with a reading of minus 46.4 for the week ending January 22. That was an improvement from the previous week of a full point, but the indicator remained mired near the bottom.

Improvements yet to come might change that. Things should continue on an upward bent, if the forecasting ability of the index of Leading Economic Indicators can be believed. The LEI rose by 0.4% in January, it’s third gain in a row after a couple of rough summer months. The LEI may better reflect the economic climate in which its components are measured, but to the extent that it does foretell the future, we should have enough momentum to power us ahead in at least the first quarter of 2012.

The Fed’s assessment of the economy over the next few quarters are no doubt darker than the conditions we are experiencing. The effects of a slowdown in Europe have yet to be fully felt here, which may trim exports to a measurable degree, and the economy here is by no means firing on all cylinders and is less able to endure any kind of shock. That being the case, of course the Fed would say that they stand ready to do more, but all the while, its a safe bet that they would rather not. The value of the Fed’s previous actions is not nil, but it is limited, as is the Fed’s ability to manage issues better done from the fiscal side rather then the monetary. That is to say, low interest rates are great for some things, but they only go so far.

Our Statistical Release features charts and graphs for 11 products, including Hybrid ARMs. Our state-by-state statistics are now here. Current Adjustable Rate Mortgage (ARM) Indexes Index For the Week Ending Previous Year Jan 20 Dec 23 Jan 21 6-Mo. TCM 0.07% 0.04% 0.19% 1-Yr. TCM 0.11% 0.12% 0.27% 3-Yr. TCM 0.36% 0.40% 1.03% 5-Yr. TCM 0.85% 0.90% 2.01% FHFB NMCR 4.15% 4.22% 4.42% SAIF 11th Dist. COF 1.201% 1.218% 1.654% HSH Nat’l Avg. Offer Rate 4.22% 4.26% 5.11%

It should be noted that there are those for whom low rates are a problem, like savers, pension funds and others. The longer-term commitment for low rates may force some rates even lower than they already are, which is very close to zero for many short-term accounts. If banks can get 0.25% for parking excess reserves with the Fed, perhaps they might consider time deposits which return something. It’s not going to happen, but is a thought.

Arguably, the broad economy is better served by re-igniting and re-inflating housing, and this is the path we are set upon, for at least the foreseeable future. Refinance if you can, purchase a new (or used, or additional) home if you are inclined, but there doesn’t seem to be much of a sense of urgency… for the moment. We are perhaps more optimistic than others that the housing market will strengthen in 2012.

In a one-sentence quip in his State of the Union speech, President Obama alluded to a new administration refinance plan. We’ve read plenty of speculation, but it may be a hybrid plan based upon a streamlined refinance concept detailed in an economic paper revealed last fall, coupled with elements of the FHA Short-Refi concept. It is claimed to be aimed at non-GSE mortgages (jumbos, etc) but there has been no official plan revealed. If it comes, we’ll review it and critique as necessary.

In the meanwhile, we have a full plate of economic data due out next week. We’ll be looking for the Fed’s Senior Loan Office survey detailing lending standards, ISM reports, worker productivity, the employment report and more. Rates have settled after initially being upset by the Obama announcement, soothed no doubt by the Fed’s comforting hand. We would expect that this week’s minor blip will be erased and we’ll settle back to just about record lows, again.

For an longer-range outlook for rates and the economy, one which will take you up until mid-February, have a look at our new Two-Month Forecast.

———-

Like HARP 2.0? We think we have a better plan… for over a year now!
Have a look at our idea — read about HSH.com’s Value Gap Refinance concept, and be sure to let us know what you think.

---

These are the latest HSH National Interest Rate Benchmarks — produced from HSH’s weekly editorial survey of mortgage lenders across the US. Click here for more information. We have long-term statistical sets, too.

Source: HSHAssociates.com, Pompton Plains NJ
1-800-UPDATES   Compile Date: 01/27/2012   ©2012 HSH Associates

Popularity: 1% [?]

January 20, 2012 — Low and stable mortgage rates and a modestly improving economy are starting to produce positive effects on the nation’s housing market. While starting from extraordinarily low levels, and though improvement are still of course tenuous, there have been accumulating signs of improvement for months. If the economy can continue to nudge forward for a while longer without some new or already-known catastrophe to derail it, we just might have ourselves a housing market worth talking about when Spring rolls around.

HSH.com’s broad-market mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages rose by three basis points (.03%) from last week, climbing to an average 4.22% The FRMI’s 15-year companion also increased by three basis points (.03%) to finish the weekly survey at an average 3.53%. Important to homebuyers and low-equity-stake refinancers, FHA-backed 30-year mortgages retreated by another two hundredths of a percentage point to 3.86%, while the overall average for 5/1 Hybrid ARMs gained a single basis point to end at 3.04%. Rates have moved gently off record lows, which is to be expected given the warmer economic climate.

Are we really on a path to housing recovery, finally? Arguably. By no means yet at a breakeven level, let alone healthy, the indicator of builder sentiment from the National Association of Homebuilders continues to rise. The reading of 25 for January was about half the neutral level of 50, but almost double the 13 seen as recently as June. In fact, the overall reading was the highest in four years. Sales of single-family homes, traffic in showrooms and sales offices and expectations for sales over the next six months are all on the rise. Even if there is a long way to go, that we are moving in the right direction is a welcome sign of recovery.

See this week’s Statistical Release and Trend Graphs.

Want to get Market Trends as soon as it’s published on Friday? Get it via email — subscribe here!

Starts of new homes were down by 4.1% in December, but that minor dip does not derail an almost steady upturn in residential construction which began in March 2011. The 657,000 rate of initiation was off of November’s pace, but permits for future activity were almost level, and starts of single-family homes continue to ratchet higher; at 470,000 annualized, this would be counted among the highest annualized rates seen over the past couple of years.

Sales of existing homes are bouncing higher, too. The National Association of Realtors reported a 5% rise in sales in December, with the total landing at a 4.61 million (annualized) rate of sale for the month. It was the strongest annualized figure since early 2011. Inventory levels shrank back to 6.2 months of available stock, but it was noted that this was die to a decline in listings rather than an upsurge in actual sales. More inventory is expected to come on the market as foreclosure activity — stalled for a portion of 2011 — begins to again come back up to speed.

Inventories may have leaned out as potential homesellers decide to wait for better conditions in the form of firming prices and greater traffic levels before re-listing their homes for sale. Others may have hoped to sell as their personal economic conditions deteriorated, but may have seen improvements or even obtained loan modifications or refinances which provided sufficient breathing room to allow them to remain for a while longer. Whatever the case, slimmer inventories may eventually support prices, but for the moment, that’s not been the case, as prices are still easing (albeit at a slower pace that earlier in 2011).

Prices of other things are leveling off, too. The Producer Price Index declined by 0.1% in December, down from a rise of 0.3% in November. Over the past year, PPI headline inflation has been running at a 4.8% pace, but that’s actually considerably cooler than 2010 and earlier in 2011. The “core” rate of PPI did rise by 0.3% and is rising somewhat. It is now running at a 3% annualized rate and on a more-or-less steady uptick since early this year.

The Consumer Price Index had much the same to say. Headline PPI was unchanged in December, but the “core” rate of inflation (exclusive of the most volatile components like food and energy) rose by 0.1%. Over the past 12 months, headline inflation is running a flat 3% rate of increase and is generally falling; core CPI is running at a 2.2% pace and has generally been firm over the past few months. It is believe that core inflation of about 2% is the Fed’s preferred level, and that we are hanging near there supports their policy actions. There are those who are calling for the Fed to do more, or do more quickly, but if steady signs of improvement continue to show in the weakest areas of the economy — jobs and housing — they will probably be happy to sit and observe, or only tweak policy at the margins.

With an 8.5% unemployment rate, we have a long way to go to say that labor markets are healed. However, some progress has been made in retreating from the high-water marks of both layoffs and unemployment, and improvements in hiring have been noted in recent months. There is a beneficial loop which occurs when a job is created; it creates spending, which in turn helps a job to be created, and so on. Rising asset prices can also contribute to this, too, as the wealth effect promotes purchases (the reverse is also true, as seen over the past couple of years).

While hiring has been slow to develop, we have noted a general downward trend in firings. Weekly unemployment claims had been moving downward for weeks, only to spike back to 402,000 two weeks ago. However, a reassuring report from the week ending January 14 of just 352,000 new applications provided a counterbalance for that blip, and smoothing out the last few weeks leaves us at about 375,000 average, a relatively good figure and comparable to recent trends in place since November.

Factory activity has improved somewhat in early 2012 relative to the end of 2011. The index produced by the Philadelphia Federal Reserve for January sported a value of 7.3, up by 0.5 from December, continuing a solid but moderate trend which started after a late Summer swoon. As well, the New York Federal Reserve reporting strengthening activity in their Empire State Manufacturing index, which rose to 13.5 in January, the highest such value since April of last year.

Stepping back a little, Industrial Production expanded by 0.4% in December, with rising output for manufacturers and mines offsetting a decline in utility output. That decline was probably due to unseasonably warm weather in parts of the country as winter has been quite mild in many places. Factory capacity utilization rose to 78.1% during the month, matching a high for the recovery to date.

Rising gasoline prices probably to blame, the Bloomberg Consumer Comfort Index peeled back from its recent high, shedding 2.7 points during the week ending January 15. Of course, the slippage in moods might also be due to the back-to-normal blues after a spate of holiday-shortened workweeks though the holiday season, too. Optimism has been hard to come by for some time now, but perhaps this is just a temporary lull.

Our Statistical Release features charts and graphs for 11 products, including Hybrid ARMs. Our state-by-state statistics are now here. Current Adjustable Rate Mortgage (ARM) Indexes Index For the Week Ending Previous Year Jan 13 Dec 16 Jan 14 6-Mo. TCM 0.05% 0.05% 0.18% 1-Yr. TCM 0.11% 0.11% 0.27% 3-Yr. TCM 0.36% 0.36% 1.01% 5-Yr. TCM 0.83% 0.85% 1.96% FHFB NMCR 4.22% 4.19% 4.49% SAIF 11th Dist. COF 1.201% 1.218% 1.654% HSH Nat’l Avg. Offer Rate 4.19% 4.25% 5.05%

At least a few headlines were made by the 23% increase in mortgage applications reported by the Mortgage Bankers Association of America for the week ending January 13. While of course welcome, our experience is that such a flare is typical for the first full week of January, as some pent-up demand occurs during the busy holiday season. Typically, if interest rates have remained favorable from about Thanksgiving to New Year’s Day (and they are certainly all of that at the moment) borrowers finally get a cleared spot on their calendar to execute a transaction. This is especially true for refinancing (+26.5%) but also for purchase transaction (+10.3%). Such percentage increases probably won’t persist, but instead may be replaced with more modest but steady gains in the coming weeks.

Yields on 10-year Treasuries finished last week on a downward note, and rates were at record lows again through into Wednesday morning. However, the reverse is true this week, with Treasuries ending on a high note, and nudging rates off record lows. While some of this increase in underlying costs will probably be absorbed into still-wide spreads, a bit of it may make its way into rates next week, which would mean a further slight move away from record low levels. No real movement, but probably a couple of basis points upward is to be expected, based on where we are at the moment.

The Fed meets next week to discuss policy and communication strategies. It’s a two-day affair, finishing on Wednesday. Expect no change to policy, perhaps some more frank discussion about where rates are expected to be going, a more upbeat assessment of the economic situation and a cautiously hopeful tone overall.

For an longer-range outlook for rates and the economy, one which will take you up until mid-February, have a look at our new Two-Month Forecast.

———-

Like HARP 2.0? We think we have a better plan… for over a year now!
Have a look at our idea — read about HSH.com’s Value Gap Refinance concept, and be sure to let us know what you think.

---

These are the latest HSH National Interest Rate Benchmarks — produced from HSH’s weekly editorial survey of mortgage lenders across the US. Click here for more information. We have long-term statistical sets, too.

Source: HSHAssociates.com, Pompton Plains NJ
1-800-UPDATES   Compile Date: 01/20/2012   ©2011 HSH Associates

Popularity: 1% [?]

January 13, 2012 — Mortgage rates eased a little bit this week, sufficient to produce new record lows for fixed rate mortgages. The statistical wobble is one we’ve seen many times over the past 11 weeks, as mortgage interest rates have held fast to a narrow range. In reality, they are little different today than they were a month ago, but the lengthening period of stable and low rates is having a beneficial effect on home sales.

HSH.com’s broad-market mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages slid by seven basis points (.07%) from last week, easing to an average 4.19%, while the FRMI’s 15-year companion increased lost six basis points (.06%) to finish the weekly survey at an average 3.50%. Important to homebuyers and low-equity-stake refinancers, FHA-backed 30-year mortgages retreated by just a single hundredth of a percentage point to 3.88%, while the overall average for 5/1 Hybrid ARMs erased six basis points to end at 3.01%. All of these loans are again at record lows.

The Federal Reserve’s review of regional economic conditions, called the Beige Book for the color of its cover, said that “economic activity expanded at a modest to moderate pace” during the period of late November through December. It was perhaps the most upbeat assessment of the economy in some time, with gains in consumer spending, little or no price pressures, expanding factory activity and more. Real estate markets of course remain “sluggish” with sales of homes still low, but pockets of improvement in multifamily construction and some short-term stabilization of home prices were noted.

See this week’s Statistical Release and Trend Graphs.

Want to get Market Trends as soon as it’s published on Friday? Get it via email — subscribe here!

Consumer borrowing revived in November, rising by $20.4 billion for the month. The expansion was led by a $5.6B rise in revolving account balances, the largest increase since March of 2008, but the larger share came from a $14.8B rise in installment borrowing, the kind of loans used for auto purchases and education. Installment borrowing has been on the rise (if erratically) for much of 2011, and we wonder if the gains here are due to more discouraged jobs-seekers heading back to school than to consumer driven purchases. Why those dollars are being borrowed matters, since one would indicate an on-going lack of developing opportunities, while the other might suggest growing confidence in the future direction of the economy.

Given that Retail sales in December increased by just 0.1%, it seems more likely due to a still-tough employment market. The small gain was a bit of a disappointment, but it’s important to remember that the percentage change here is reflective of the dollar amount spent during the period; if retailers were slashing prices and running loss-leader sales, it would be hard to make the figure increase very much, even if actual sales were solid. Also, there is still the “gift card” effect to consider; as those aren’t recognized as sales until they are actually used, there may still be some sales gains yet to be realized in early 2012.

Lackluster sales gains may have led to the dismissal of some additional seasonal help, fostering a 24,000 increase in new unemployment claims filed during the week ending January 7. After weeks of holding in relatively solid territory and even threatening to move lower, the rise this week moved the number back to 399K, a level more associated with a slowdown in the job market than any improving trend. However, it was just a single week and perhaps some seasonal distortion due to holiday adjustments is still in play.

The nation’s imbalance of trade expanded unexpectedly in November, widening to $47.8 billion for the month. Exports declined, probably the effect of economic slowing related to uncertainty caused by the Eurozone’s financial troubles. It is worth noting that Germany reported a mild contraction in their economy in the fourth quarter of 2011; that being the case, it will no doubt be difficult for the U.S. to continue to have growth in exports if the economies of some of our trading partners are struggling. At the same time, moderate expansion of our own economy is helping to fuel demand for imports, which in turn helps to support some of those partners, but the benefits of trade are arguably tipped more strongly toward those selling goods and services rather than to those buying them.

In December, prices of imported goods declined in the aggregate, sliding by 0.1% overall, so at least we are not importing inflation along with items we use. Slipping fuel prices pulled down the figure, but leaving them out of the equation left just a 0.2% rise in its place. Costs for things we exported went down by 0.5%, so we’re not sending any inflation out the door, either. After very strong increases though April of 2011, prices have increased in only three of the last eight months, and only slightly at that. As such, annualized costs for both imports and exports are falling, with imports now rising at an 8.5% annual clip (down from 13.7 as recently as July) and exports at just 3.6% (down from a recent high of over 10% in June).

Easing price pressures may give the Fed more leeway to keep rates lower for longer periods of time, or even institute additional forms of monetary stimulus with little fear of stoking inflation. Some analysts have started to speculate that the Fed might institute a new Treasury or MBS-buying program this year, but that’s speculative at this point. More likely, and unless there is an emergency, they will likely concentrate on improving communications with market participants about their intentions to see if such a program has any effect on longer-term interest rates.

Stockpiles of unsold goods remain at comfortable levels, according to the latest report in business inventory levels from the Census Bureau. Manufacturers, wholesale firms and retailers alike all sported mild increases in their holdings, and ratios of goods on hand relative to sales all held steady; manufacturers held 1.34 months, retailers 1.32 months and wholesalers 1.15 months of stock, respectively. These fairly lean levels mean that any uptick in demand must be met with new orders, which would prove beneficial to the nation’s manufacturers. Given the still-tenuous nature of the recovery, all stations along the supply chains remain wary of letting imbalances form between supply and demand.

Consumers are becoming marginally happier. The weekly Bloomberg Consumer Comfort Index rose by just a tenth of a point to minus 47.7 for the week ending January 8. At that, it is a new high for the new year, and a nudge closer toward highs of the last year, too. As well, the preliminary January reading of Consumer Sentiment by the University of Michigan found a 4.1 point gain in their indicator, continuing a recovery which began after a summer swoon. At a present 74.0, we are almost back to May 2011 levels (74.3), the highest reading of the recovery to date. The trend continues in the right direction, even as we remain far below pre-recession levels of sentiment.

Our Statistical Release features charts and graphs for 11 products, including Hybrid ARMs. Our state-by-state statistics are now here. Current Adjustable Rate Mortgage (ARM) Indexes Index For the Week Ending Previous Year Jan 06 Dec 09 Jan 07 6-Mo. TCM 0.06% 0.05% 0.19% 1-Yr. TCM 0.12% 0.11% 0.29% 3-Yr. TCM 0.40% 0.38% 1.07% 5-Yr. TCM 0.88% 0.90% 2.04% FHFB NMCR 4.22% 4.19% 4.49% SAIF 11th Dist. COF 1.201% 1.218% 1.654% HSH Nat’l Avg. Offer Rate 4.26% 4.31% 5.12%

Where do we go from here? Mortgage rates are mostly wandering around, directionless. With underlying 10yr Treasuries also pretty firm and rangebound at present levels, the small increases and declines in rates are probably due to some investor (or Fed) appetite for MBS in the market. We have noted some mild narrowing of spreads in recent weeks, but even they remain well above the narrowest seen in the past year; mortgage rates moved only slightly downward while Treasuries benefited from strong flight-to-safety purchases during times of economic duress late last year. Even if the blaring headlines have stopped for the most part, those troubles remain with us, with Treasuries retaining strong interest from investors.

As noted in the chart above, mortgage rates started to support home sales to a greater degree once they slipped below the 4.5% threshold or thereabouts. Low and stable mortgage rates are essential to allow for the planning and execution of a home purchase, and the last 10 weeks of near-stasis in rates is an important component of strengthening the housing market in 2012. Next week, we’ll get a couple of indicators to help see if we are progressing in that regard, including data from the home builders, on housing starts and existing home sales, plus a few other key indicators. We thought rates might move up a couple of basis points this week, but they decided to move down by a few instead. Should the economic news be largely positive next week, we will probably move off record lows by a couple of basis points.

That said, over the next few weeks we will start to see the impact of Congress’ decision to raise the cost of the mortgage guarantee fees imposed by Fannie Mae and Freddie Mac. These increase will tend to keep rates firmer than they would otherwise be, increasing interest rates and/or fees consumers will pay by anywhere from an eighth percentage point or more (or increasing the fees to consumers, instead). With rates at or near record lows, it will probably be difficult to find anyone who notices or cares about the increase in cost.

For an longer-range outlook for rates and the economy, one which will take you up until mid-February, have a look at our new Two-Month Forecast.

———-

Like HARP 2.0? We think we have a better plan… for over a year now!
Have a look at our idea — read about HSH.com’s Value Gap Refinance concept, and be sure to let us know what you think.

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