They say that no news is good news. But last week, several reports brought some surprising good news to the markets. Read on for details and what they mean for home loan rates.
There was good news on the labor front, as last weeks Initial Jobless Claims fell to 33 9,000, the lowest level in over four years. This news came on the heels of the surprising drop in the unemployment rate to 7.8% in September. This is encouraging news and could ease fears of slowing growth.
Also encouraging was the news from RealtyTrac that foreclosure activity declined to a five-year low in September, falling 7% from August and 16% from the same period last year. Housing has already improved substantially in certain parts of the country and this news bodes well for those states and areas that struggled with high foreclosure activity. Rounding out the week was some of the most surprising news of all: Consumer Sentiment surged to 83.1 in October, the highest level in five years.
Tempering this good news was a report from the International Monetary Fund (IMF), which said that the world economy will grow by 3.3% this year, the slowest since 2009. The IMF said that unless Europe and the U.S. address the financial threats to their resp ective economies, growth will continue to slow.
So what does all of this mean for home loan rates?
Remember that good economic news normally causes investors to move their money out of safer investments like Bondsincluding Mortgage Bonds, which home loan rates are based onand into riskier investments like Stocks to try and take advantage of gains. However, the Feds continued Mortgage Bond purchases as part of their third round of Quantitative Easing (QE3) and tame wholesale inflation data helped Bonds and home loan rates remain near record lows last week.
The bottom line is that now is a great time to consider a home purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all.