1/3 Don’t Know Their Rate
Ask any American how much money they make for a living, and they’ll tell you down to the weekly penny. Ask what interest rate governs their single-largest monthly expense, and more than a third don’t know.
“Your mortgage rate is one of the most important numbers in your financial life, and there’s a good chance that one of your neighbors has no idea regarding how much he or she is paying,” said Holden Lewis, a senior mortgage analyst at Bankrate.com.
Bankrate.com surveyed a national sample of 1,000 adults and found that 35 percent did not know their mortgage interest rate. One in 7 mortgage holders were either “not too confident,” “not at all confident” or had no idea about their rate.
Lenders say the finding is not at all surprising. Home buying is stressful, and most borrowers are honed in on what their monthly payment will be, not how they get to that payment. What does this mean for home purchases? It means that setting up the borrower with the right loan and payment and making the process smooth and stress-free is more important than the interest rate to the borrower as part of the experience.
What Happened to Rates Last Week:
Jobs, Jobs, Jobs: By far, the biggest economic event of the week was Friday’s release of the jobs data. Mortgage Backed Securities sold off -73 BPS on the news which caused rates to rise.
January Non-Farm Payrolls (NFP) hit 257K vs est of 235K. December was upwardly revised from 252K all the way up to 329K. All the prior month’s revisions improved by an additional 147K more jobs than originally reported.
The Unemployment Rate ticked up a smidge to 5.7 vs est of 5.6%, but this is due to a slight change in the participation rate.
But bonds like MBS really sold off on the Monthly Average Hourly Earnings 0.5% vs est of 0.2% and on a year-over-year basis it rose 2.2%. The bond market is focused on the massive revisions and the fact that the 3 month average is now at 336K per month which is at its highest levels in 17 years and the tightening of labor slack as indicated by the increase in wage inflation.
Internationally, long bond traders kept a keen eye on developments in Greece and Ukraine and Germany was at the center stage for both. Both Greece and Germany traded barbs over renegotiating the terms and scope of Greece’s bailout package and the ECB gave Greece a 10 day ultimatum to fall in line. Both Germany and France met in Ukraine and then Moscow to broker a peace deal between the pro-Russian separatists and Ukraine. Both issues are important because each situation has helped keep mortgage rates low as foreign investors have been purchasing our bonds as a safe haven.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|10-Feb||10:00 AM||Wholesale Inventories||–||0.20%||0.80%|
|10-Feb||10:00 AM||JOLTS – Job Openings||–||–||4.972M|
|11-Feb||7:00 AM||MBA Mortgage Index||–||NA||1.30%|
|11-Feb||10:30 AM||Crude Inventories||–||NA||6.333M|
|11-Feb||2:00 PM||Treasury Budget||–||NA||-$10.3B|
|12-Feb||8:30 AM||Initial Claims||–||285K||278K|
|12-Feb||8:30 AM||Continuing Claims||–||2405K||2400K|
|12-Feb||8:30 AM||Retail Sales||–||-0.50%||-0.90%|
|12-Feb||8:30 AM||Retail Sales ex-auto||–||-0.50%||-1.00%|
|12-Feb||10:00 AM||Business Inventories||–||0.20%||0.20%|
|12-Feb||10:30 AM||Natural Gas Inventories||–||NA||-115 bcf|
|13-Feb||8:30 AM||Export Prices ex-ag.||–||NA||-1.20%|
|13-Feb||8:30 AM||Import Prices ex-oil||–||NA||-0.10%|
|13-Feb||9:55 AM||Mich Sentiment||–||NA||98.1|
|13-Feb||10:00 AM||Mich Sentiment||–||98.5||98.1|
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.