Tag Archives: HARP Program

This week the 30- and 15-year fixed mortgage rates increased by 0.04%, making them 4.15% and 3.38%, respectively. The 5-year adjustable rate had a bigger jump, by increasing 0.11%, making it 3.14%. These increases are due to the good economic news that has been released this past week. The items released this week were the employment summary, retail sales report, Federal Open Market Committee report, bank strength, and the stock market. Each sector showing the economy is slowly, but steadily improving. What this leaves us with is, increasing mortgage interest rates. As investors see an improving Wall St. the shift from fixed income products like the 10 Treasury note, which is heavily correlated with mortgage interest rates, to equities or for what’s better known as corporate stock.

The Bureau of Labor Statistics released the Employment Situation Summary for February on March 9th. They stated that 227,000 jobs were filled in February, even though the unemployment rate remained the same, at 8.3 percent. Another thing that the report stated was that the labor market has been improving for the past three months. Since there seems to be an upward moving trend in the labor market people are gaining more confidence in the job market, which gives a significant boost to another key statistic consumer confidence.
 
On March 13th the Department of Commerce released their Retail Sales report for February. Retail sales have increased by 1.1 percent from January. This is good news because this is the biggest jump in sales for the past five months and it is also up 6.5 percent from February 2011.

The Federal Open Market Committee met on March 13th, giving another positive outlook for the economy. They show the improvements in the labor market, household spending, and business fixed investments. With these improvements the Committee is expecting to see economic growth over time and a decline in the unemployment rate. To help with the economic recovery the committee wants to keep an accommodative stance for monetary policy.

The Federal Reserve has been conducting stress tests for banks to see how they would be able to handle another economic crisis. The Federal Reserve uses a hypothetical economic scenario to gauge if the banks would have enough capital to operate normally, as well as to continue lending money to consumers and businesses. Nineteen banks were tested with this system and out of those, fifteen passed the test. This test has shown consumers that the banks are becoming more financially sound now. The Federal Reserve has been conducting stress test on banks since the advent of “The Great Recession” in 2008. With the loans becoming defunct during that crises, so was bank liquidity the Fed wanted a clear indication that improving liquidity would abate a serious meltdown of the banking industry.

With all of the confidence in the economy, investors have started putting money back into the stock market and taking it out of the bond market. Again, This can be shown with the Dow Jones, NASDAQ, and S&P all increasing over the past week. This alone will start to increase the mortgage rates since there is less money going into the safe Treasury Bonds.

As for the homeowners who have been waiting for HARP 2.0 to come, the wait is over. Updates to Fannie Mae and Freddie Mac systems will be completed this weekend and then borrowers can start applying to refinance under this program.

With all of these economic improvements, the consumers are gaining more confidence and we should start to see mortgage rates increase over the next few weeks. The good thing is that they will most likely not sky rocket upwards, but we could see them hitting close to 5% in a couple of months. With this being said, the best thing would be to lock rates in now before they rise any higher. If you need to refinance now would be a good time to do it while the rates are on the lower side.