October 17, 2012
Last week in review (October 8 - 12, 2012)
Last week, several reports brought some surprising good news to the markets. Read on for details and what they mean for home loan rates.
Table source: Mortgage Success Source
There was good news on the labor front as last week’s Initial Jobless Claims fell to 339,000, the lowest level in four years. This news came on the heels of a surprising drop in the unemployment rate to 7.8% in September. This is encouraging news and could ease fears of slowing growth.
Also encouraging was the news from RealtyTrac that foreclosure activity declined to a five-year low in September, falling 7% from August and 16% from the same period last year. Housing has already improved substantially in certain parts of the country and this news bodes well for those states and areas that struggled with high foreclosure activity. Rounding out the week was some of the most surprising news of all: Consumer Sentiment surged to 83.1 in October, the highest level in five years.
Tempering this good news was a report from the International Monetary Fund (IMF), which said that the world economy will grow by 3.3% this year, the slowest since 2009. The IMF said that unless Europe and the U.S. address the financial threats to their respective economies, growth will continue to slow.
What does all of this mean for home loan rates? Remember that good economic news normally causes investors to move their money out of safer investments like bonds—including mortgage bonds, which home loan rates are based on—and into riskier investments like stocks to try and take advantage of gains. However, the Fed’s continued mortgage bond purchases as part of their third round of Quantitative Easing (QE3) and tame wholesale inflation data helped bonds and home loan rates remain near record lows last week.
The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows.
In the news this week (October 15 - 19, 2012)
Table Source: Mortgage Success Source