Mortgage rates snooze through New Year
Mortgage rates snooze through New Year
By Holden Lewis • Bankrate.com
The mortgage market hit the snooze button over the New Year holiday as rates barely changed.
The benchmark 30-year fixed-rate mortgage fell 2 basis points to 5.81 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.34 discount and origination points. One year ago, the mortgage index was 5.87 percent.
The 15-year fixed-rate mortgage was unchanged at 5.24 percent. The one-year adjustable-rate mortgage rose 2 basis points to 4.38 percent.
Actually, it's a bit misleading to say that rates didn't change much. Treasury yields dipped about 10 basis points the last two days of 2004 in sleepy trading, then perked back up after the party-filled weekend, ending up about where they were a week earlier. Mortgage rates followed.
The wake-up call was delivered Tuesday by the Federal Reserve, which released the minutes of its rate-setting meeting of Dec. 14. At that meeting three weeks ago, the Fed raised short-term interest rates by a quarter-point and proclaimed: "Inflation and longer-term inflation expectations remain well contained."
When the minutes to that meeting were released this week, it turned out that the participants weren't unanimous in the inflation assessment. There weren't any wild-eyed bankers slamming their shoes on the table, yelling that inflation will bury us, but, as the minutes say, "a number of participants cited developments that could pose upside inflation risks." The developments include oil prices that are higher than a year ago, the falling value of the dollar in relation to other currencies, a slowdown in productivity growth, and rising unit labor costs.
Wall Street interpreted the minutes to mean that the Fed is a bit more worried about inflation than investors had believed. That's why Treasury yields and mortgage rates, after dipping last week, rose back to their previous levels this week.
The participants in the Fed meeting also brought up the issue of a possible housing bubble. The minutes say that some of the meeting participants expressed concern over "potentially excessive risk-taking in financial markets" as well as "anecdotal reports that speculative demands were becoming apparent in the markets for single-family homes and condominiums."
Some Fed members are worrying about the frantic increases in home prices. Now, that's a wake-up call.
By Holden Lewis • Bankrate.com
The mortgage market hit the snooze button over the New Year holiday as rates barely changed.
The benchmark 30-year fixed-rate mortgage fell 2 basis points to 5.81 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.34 discount and origination points. One year ago, the mortgage index was 5.87 percent.
The 15-year fixed-rate mortgage was unchanged at 5.24 percent. The one-year adjustable-rate mortgage rose 2 basis points to 4.38 percent.
Actually, it's a bit misleading to say that rates didn't change much. Treasury yields dipped about 10 basis points the last two days of 2004 in sleepy trading, then perked back up after the party-filled weekend, ending up about where they were a week earlier. Mortgage rates followed.
The wake-up call was delivered Tuesday by the Federal Reserve, which released the minutes of its rate-setting meeting of Dec. 14. At that meeting three weeks ago, the Fed raised short-term interest rates by a quarter-point and proclaimed: "Inflation and longer-term inflation expectations remain well contained."
When the minutes to that meeting were released this week, it turned out that the participants weren't unanimous in the inflation assessment. There weren't any wild-eyed bankers slamming their shoes on the table, yelling that inflation will bury us, but, as the minutes say, "a number of participants cited developments that could pose upside inflation risks." The developments include oil prices that are higher than a year ago, the falling value of the dollar in relation to other currencies, a slowdown in productivity growth, and rising unit labor costs.
Wall Street interpreted the minutes to mean that the Fed is a bit more worried about inflation than investors had believed. That's why Treasury yields and mortgage rates, after dipping last week, rose back to their previous levels this week.
The participants in the Fed meeting also brought up the issue of a possible housing bubble. The minutes say that some of the meeting participants expressed concern over "potentially excessive risk-taking in financial markets" as well as "anecdotal reports that speculative demands were becoming apparent in the markets for single-family homes and condominiums."
Some Fed members are worrying about the frantic increases in home prices. Now, that's a wake-up call.
posted by Kirby P at 9:45 AM
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