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Elva Wormley's Blog

By Elva Wormley | Mortgage Broker
or Lender in San Jose, CA

What's Ahead For Mortgage Rates This Week : November 30, 2009

Jobs are in focus this weekMortgage markets improved last week on stronger-than-expected economic data and safe haven buying.

The holiday-shortened trading week amplified what should have been modest gains into large ones.

Conforming mortgage rates dropped by about a quarter-percent last week, dropping them near their best levels of the year -- and of all-time.

Oddly, mortgage rates are falling as the U.S. dollar weakens. This is atypical because mortgage bonds are repaid in U.S. dollars.  When the value of the dollar is falling, therefore, the value of holding mortgage bonds become less over time. 

Investors are snapping up bonds with fury, however. Partially because of lingering concerns related to Dubai, and partially because of faith in the U.S. economy's long-term health.

This week, those beliefs could be shaken to the core -- specifically because of Friday's jobs report.

It's no secret that the economy is growing.  Housing is improving, banks are re-capitalizing, and businesses are making capital investment.  However, employment is lagging.

More than 4 million jobs have been lost this year and the unemployment rate is north of 10 percent for the first time since 1983.  Consumers are worried for their jobs and are guarding their wallets the holiday season as a result. 

The economy can't grow without consumer spending, though, and that's why Friday's job figures will play an especially large role in mortgage markets. If employment data goes positive, stock markets will rally at the expense of mortgage rates.

Conversely, if data looks worse, mortgage rates should dip.

Either way, it's a gamble.  If you haven't looked at the benefits of a refinance lately, waiting until Friday to see what happens may be ill-advised.  This is because the last two times mortgage rates fell this low, markets corrected within 48 hours, sending rates soaring higher.

Rates look good today. Consider locking something in before rates have reason to rise.

Elva A. Wormley
Your Mortgage Consultant for Life
Phone: 408.615.8500 Fax: 408.519.5983
Cobalt Financial Corporation
2845 Moorpark Avenue, Suite 209
San Jose, CA 95128-3158
Email:  elva@ewormley.com
Please visit my website for current rates: http://www.besthomeloanadvice.com


By CJ Brasiel,  Tue Dec 1 2009, 08:13
Excellent post Elva. When I bought my first house in California it was 1992 and rates were 8.5%. It is amazing to see clients being able to buy a home at 4.875% today. As you discuss, jobs and the much talked about "flood" of foreclosures yet to come keep people wondering whether now is the time to buy. Even if the market were to go down another 10%, it is hard to argue with these rates and a 45% decline in average sales price from the peek of 2007. Many predict rates will rise after New Years simply because of unemployment and inflation worries.
By Elva Wormley,  Tue Dec 1 2009, 18:30
Hi CJ, Thank you so very much for reading my post and taking the time to write a comment. I appreciate it! I think this is a great time to purchase a home and I'm telling my clients they should take advantage of the low mortgage rates now. Well, take care, CJ, and thanks again.
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