What’s Ahead For California Mortgage Rates: November 29, 2010

Unemployment Rate 2007-2010In a holiday-shortened week on Wall Street, mortgage markets improved on 3 of 4 days, but still posted its fourth consecutive losing week.

Unfortunately for rate shoppers and home buyers in Temecula, Murrieta, Menifee, Corona, Riverside and the entire Inland Empire, last week’s 3 days of gains were mild improvements; the one day of deterioration was among the Top 10 worst days for mortgage bonds this year.  Ouch!

Mortgage rates in California are at their highest levels since mid-July. The Refi Boom is unwinding quickly.

Last week underscores the importance of the global community to the future of the U.S. mortgage market. Two of the main reasons why mortgage rates increased were non-domestic.

  1. Concerns for a full-blown North Korea/South Korea conflict lessened quickly
  2. The likelihood of a speedy, $85 billion bailout Ireland increased

The two events stemmed the typical safe-haven buying patterns that accompany geo-political and economic uncertainty, and drive down mortgage rates.

This week, mortgage rates may rise again.

First, Ireland’s bailout package was signed Sunday morning and that relieves some pressure on the European Union.  Second, this week’s economic releases should show that the U.S. economy is still expanding, and that U.S. consumers are still spending — both actions typically cause rates to rise.

A sampling of the week’s releases include:

  • Tuesday : Case-Shiller Index; Consumer Confidence surveys
  • Thursday : Initial and Continuing Jobless Claims; Pending Home Sales
  • Friday : Non-Farm Payrolls; Unemployment Rate

If you haven’t locked a mortgage rate and are waiting for “the bottom”, remember that the mortgage market waits for no one. Rates are .375% to .5% higher since the start of November and look ready to rise even higher.  Call your loan officer and get your application in process this week.

The longer you wait, the higher that rates could go.

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4 Responses to What’s Ahead For California Mortgage Rates: November 29, 2010

  1. Susan@Mesa Real Estate December 14, 2010 at 4:55 pm #

    Interesting post. What do you think will happen to mortgage rates after the new year? Are you expecting substantial change, or do you think it will be a slow migration?

  2. Brad Yzermans December 14, 2010 at 5:11 pm #

    Hi Susan, Since I wrote this blog post, rates have gotten even worse. Rates are extremely volatile right now. If you have buyers who were approved 1 month ago, you should make sure your LO re-approves them at the higher rate. Rates increased .125% again just today!! Rates have literally gone up .625% over the last 30 days……that’s a lot in my opinion. I see higher rates for 2011…..unless something unexpected happens to keep them where they are or go back down.

  3. Connor MacIvor December 22, 2010 at 5:48 pm #

    I have to say, first you have a very nice presentation, not too cluttered with great intel for the buyer and seller of Real Estate. Having said that, I am not coming after you, but would like to talk about interest rates.

    What do you think about the numbers for unemployment and how they directly impact interest rates?

    Can/Will the govt raise interest rates even though we are still showing record numbers for unemployment – or do they consider this?


  4. Brad Yzermans December 22, 2010 at 6:49 pm #

    Hi Connor,

    Thanks for the comment and question. The unemployment rate sure is killing our housing market here in So Cal isn’t it? No jobs means no money to afford a mortgage payment. The high unemployment directly impacts the spending and our economies ability to rebound and is a huge topic. Ironically, high unemployment actually keeps mortgage rates low….all bad economic news typically does this. When there is bad economic news the stock market typically drops and drives investors to purchase bonds, which then drives up bond prices, which then drops mortgage rates.

    So when the economy does improve and companies start hiring more, investors will buy more stocks, which will shift money away form the bond market, and then cause bond prices to drop, and then cause mortgage rates to rise. So rates are going up short and long term. Plus, with all the money the govt. is printing out of thin air, inflation will set in sooner or later….it’s unavoidable, and inflation causes mortgage rates to rise. This blog post may be helpful in getting more info you asked about. http://homeloanartist.com/2010/03/top-five-market-factors-that-influence-mortgage-rates/

    So at the risk of sounding like a dooms-dayer, rates are going up and there is no stopping it. That’s why people should buy now if they can. The cost of waiting isn’t worth the risk.

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