Blogging About Loans: Mortgage Rate Indicators for Denver

An office of elite mortgage lending professionals with a common interest and goal focused on providing customer service that exceeds expectation. Thereby building our business from repeat and referral opportunities. Ruth Vogt. LMB 100023827. NMLS 257576. Regulated by the Division of Real Estate. Fairway Independent Mortgage is an Equal Housing Opportunity.

Mortgage Rate Indicators for Denver

Mortgage Rate Indicators for Denver

With the announcement that the FED will "scale back" it's purchases of Mortgage Backed Securities (MBS's) by early 2010, comes the question, what will happen to rates???

Real Estate markets across the country have benefited all year long from the artificially low rates available because of these mortgage backed securities being bought up by the FED, $1.25T worth. As this "rate intervention" is brought to a close, there is strong expectation that we will see interest rates start their upward trend.

Below are this week's mortgage rate indicators which may have an impact on interest rates.

Market Comment - Week of December 21st, 2009

Mortgage bond prices rose last week pushing mortgage interest rates lower. Rates initially spiked higher following higher than expected producer price index figures. Fortunately the consumer price index showed tame inflation on the consumer level and mortgage bonds were able to recover. The Fed kept rates unchanged, indicated they would try to keep rates low for some time, but also warned that long term security purchases would cease at the end of Q1 2010. For the week interest rates fell by about 3/8 of a discount point.

The inflation data will be the most important release this week. The recent inflation reports were mixed. The PCE price index will be carefully watched for any signs of inflationary pressures. The bond market will close early Thursday in advance of the Christmas holiday Friday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.

Economic Factors
Economic Indicator
Release Date Time
Consensus Estimate
Tuesday, Dec. 22, 2009
Up 2.7%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Existing Home Sales
Tuesday, Dec. 22, 2009
Up 3.3%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Personal Income and Outlays
Wednesday, Dec. 23, 2009
Up 0.5%, Up 0.7%
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
PCE Price Index
Wednesday, Dec. 23, 2009
Up 0.5%, Core up 0.1%
Important. A measure of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Dec. 23, 2009
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Dec. 23, 2009
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Durable Goods Orders
Thursday, Dec. 24, 2009
Up 0.4%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.

Mixed Message

The Federal Reserve left interest rates unchanged last week as expected. The remarks were mixed and caused some mortgage market uncertainty. The Fed statement indicated, "subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets."

The Fed's challenge will be stepping out of the mortgage market without causing mortgage interest rates to spike uncontrollably higher. The housing sector is a vital component of the economy. The last thing the Fed needs is for mortgage interest rates to escalate causing the housing sector to suffer. While the most recent data shows positive housing trends across most of the nation, analysts attribute the positive movements to artificially low mortgage interest rates tied to the Fed buying of mortgage bonds. How this will all play out is still very uncertain. Now is a great time to take advantage of rates at these historically favorable levels.

WR Starkey Mortgage - A different kind of company...where people come first!

Ruth Vogt
Business Development Manager (LMB100023827)
6025 South Quebec, Suite 110
Englewood, CO 80111 
Work: 720-489-0712
Fax: 720-489-0273

Opinions expressed here are the sole responsibility of the author, and do not necessarily reflect the view of Fairway Independent Mortgage.

Ruth Vogt Colorado Mortgage Lender Ruth Vogt, Sales Manager

 #LMB100023827, NMLSR# 257576

 Equal Housing Opportunity. 

 Regulated by the Division of Real Estate.  303-881-7849.


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Comment balloon 0 commentsRuth Vogt • December 20 2009 09:58PM