Mortgage Rate Volatility Can Offer Opportunities

Well, never a dull moment in the housing and mortgage market! Last week Freddie Mac actually reported a slight decrease in the interest rate trend. Interesting! And according to Chief Economist at Freddie, Sam Khater, we’re likely to continue to see mortgage rate volatility as a result of continued economic uncertainty, purchase demand slowing, and lower homebuilder sentiment.

It’s these periods of volatility that can offer opportunities for me to lock clients into a potentially lower rate for a purchase or refinance. So, if you would like me to watch rates for you, let me know, and let’s discuss your options.

Speaking of options, finding the right mortgage option for you is a multiple-choice scenario. For example, maybe an adjustable-rate mortgage makes sense. Adjustable rates mortgages offer a lower interest rate than a longer-term 15 or 30 year mortgage and can save you thousands on interest charges. There are definitely situations where they make the most sense. Reach out to me if you’d like to explore what makes sense for you in this changing market.

As for what I’m watching this week…

Sales for new homes were expected to fall only modestly to an annual rate of 750,000 in April versus 763,000 in March. However, the drop to 591,000 in April represents a much more dramatic shift than analysts were expecting, dropping 17 percent. Sales have been moderating this year in line with the climb underway in mortgage rates.

Durable goods orders – a leading indicator of the nation’s economic activity – rose 1.1 percent in March. April’s expectations are for a more modest 0.5 percent rise for the headline and gains 0.6 percent.

Mid-week we’ll get a look at the Fed’s Meeting Minutes from their last meeting. Traders are already anticipating a .50 percent rate hike at their June meeting to continue combating rising inflation. However, there’s speculation as to whether this will continue due to deteriorating economic conditions. The minutes may offer clues.

Speaking of inflation, we get a look on Friday at the Fed’s favorite inflation indicator, the PCE Index. Readings are expected to slow very sharply overall, to 0.3 percent from 0.9 percent. Expected annual rates of 6.3 and 4.9 percent would mark slowing from March’s 6.6 and 5.2 percent but we’ll have to wait and see what happens.