Interest rates for buying a home on the Palos Verdes Peninsula firmed up this week . The following are excerpts from the newsletter on interest rates published by HSH Associates :
“Despite continued firming in the influential yields on U.S. Treasury debts, mortgage rates are merely wandering about. It’s not as though these increases in costs of instruments comparable to mortgages credit can be fully ignored, but Treasuries and mortgages can often be pushed or pulled in one direction or the other by different interests and influences.
While underlying or influential interest rates may move up or down, mortgage rates are subject to market conditions, too. With demand for mortgages slackening somewhat in recent weeks, lenders may simply be absorbing some of these price increases in order to help keep business flowing, so rates being offered to the consumer aren’t moving very much. Lenders can also keep the offered interest rate the same, instead adjusting the fees the consumer will pay to attain this rate.
Influences and investors for these instruments are diverse, as well. For one, consider how many investors poured money into the safety and security of U.S.-backed debt at various times of trouble, driving those yields down to record lows. Despite that downdraft, rates for mortgages dipped somewhat, and at times this past summer even approached record lows, but never did quite make it into new record territory. At present, these same investors seem to be feeling a little more comfortable chasing higher returns in other investments, selling some holdings of Treasuries to move cash elsewhere.
That Japan’s central bank is waging a campaign to lift longer-term bond yields from negative levels is no doubt having some influence, too, as is better-than-expected showing by the U.K. economy, and of course there are market preparations underway for any move the Federal Reserve may make. We may learn a bit more about their intentions come next week, when the next FOMC meeting comes to a close; if the Fed has become more inclined to make a change in December, they may relate this at that time.
These and other concerns, including even fading fears of deflation taking hold are aligning to press Treasury yields a bit higher, back where they were in late May and early June. Of course, an improving economy will also tend to firm up interest rates a bit, and the advance estimate of Gross Domestic Product growth in the third quarter showed a fairly strong 2.9 percent growth rate for the quarter, at least so far. This figure will be revised two more times in the coming months, and it seems to us that growth in July was pretty solid, but then petered out somewhat as August and September rolled along, so there may be a slight downward revision or two over the next couple of months. The GDP report showed a deceleration in spending by consumers during the period and a pickup in growth for inventories and investment, but even so, there was a moderating of inflation during the period, as the measure of “core” personal consumption expenditures cooled to a 1.7 percent annual pace (down from 1.8 percent in the second quarter).”
All indications are that mortgage rates will be rising a bit as the Fed meets. Underlying secondary market yields have edged higher over the last few days, as have influential Treasury yields. At present, odds favor a 6-8 basis point lift or so in the conforming 30-year FRM reported by Freddie Mac; a strong employment report on Friday would tend to continue the uptick. With both a Fed meeting and the first-week-of-the-month spate of critical new economic data, it’s certain to be a busy, perhaps volatile week in the markets..”
The following are interest rate quotes from American California Financial:
30 Yr Fixed FHA
3.000 4.126 Details
Conforming 30 Yr Fixed up to $417000
3.500 3.617 Details
Conforming Jumbo 30 Yr Fixed $417001 – $625500
Jumbo 30 Yr. to $1.5 Mil
Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
3.375 3.570 Details
For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.