Excerpts from HSH Associates newsletter for the week ending June 29, 2007:
Economic crosscurrents continue to provide a less-than-clear direction for the road ahead, and mortgage rates remain at elevated levels, according to the nation’s widest sampling of mortgage prices. The average 30-year fixed-rate mortgage (FRM) edged one basis point lower, landing at 6.80%, while 5/1 Hybrid ARMs dumped four basis points to close the week at an average 6.47%.
The housing market is dragging growth downward, but perhaps the rate of decline is slowing, if nothing else. Existing Home sales for May rang in at a 5.99 million (annualized) rate of sale, down just 0.3% for the month. However, that lumbering sales pace leaves an inventory overhang of nearly nine months of unsold homes available, which may produce downward pressure on home prices. May’s median home price of $221,600 was unchanged from April.
The Fed isn’t likely to lower interest rates anytime soon even if measures of core inflation start to fall into their comfort zone, believed to be about an annualized 2% mark for “core” measures of inflation.
Mortgage rates meandered this week, closing on a slight downward note. Next week brings an Independence Day holiday right in the middle, but there are potential market-moving reports . . . so traders can’t easily skip out before or after the holiday. If we’re right . . . , mortgage rates could back off by a few more basis points, perhaps as much as four or five. At worst, we’d expect no change.
Fixed Rate Variable
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