This so-called fiscal cliff is leaving mortgage rate shoppers shaking their heads? First, we are being told, if our congress allows us to fall over that cliff, it will equate to a monthly loss of $530, or more than $6000 per year, for many americans. If this were not enough to worry about, my clients shopping for homes, are also facing the uncertainty of what direction mortgage rates will move – Up? or Down? Last week, rates have started to creep up, and up.
Freddie Mac reported the average 30-year fixed rate mortgage rate at 3.32 percent nationwide for borrowers willing to pay an accompanying 0.7 discount points plus closing costs. The average 15-year fixed rate mortgage rate was listed at 2.66 percent nationwide with an accompanying 0.6 discount points plus closing costs.
Both mortgage rates had climbed by week’s end, however. Mortgage rates made their best levels Monday afternoon. Between Tuesday and Friday, mortgage rates in Sacramento climbed.
Also last week, the National Association of Homebuilders/First American Improving Markets Index (IMI) reported 201 improving metropolitan economies nationwide. This index uses data including local employment statistics and home values to determine whether an area’s economy is “improving”.
76 new areas were added to the IMI list in December as compared to November. The geographic diversity the newly added markets suggests an overall improvement in the national economy.
Last week’s major event, however, was the 2-day Federal Reserve meeting, which adjourned Wednesday.
The post-meeting press release after included the Fed’s commitment to hold the Fed Funds Rate near zero percent where it’s been since December 2008. However, the Fed announced a change to in its plans to raise the Fed Funds Rate from near-zero at a future date.
Previously, the Fed had said it would raise the Fed Funds Rate beginning in mid-2015. Now, the Fed says it will start to raise rates when the national unemployment rate reaches 6.5 percent.
This week, mortgage rates have a lot to move on including Housing Starts (Wednesday) and Existing Home Sales (Thursday) from the housing sector; Jobless Claims (Thursday) from the Labor Department; and a key inflation reading from the Department of Commerce. Each has the capability to move mortgage rates.
Markets will continue to respond to Fiscal Cliff discussions, which ever way they go.