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Are mortgage rates ever going to be back down at 4.5% or are we on the way up for a while

  • June 04 2009 - US
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Answers (10)

Wow, there are some long answers here!  The simple fact is this:  The Feds are spending money like crazy.  The only way to pay for it is issue more debt.  More debt pumped in to the market without enough demand drives prices down.  When bond prices drop yields rise.  Yields = Interest Rates.  So, unless you think the Obama Administratioin is going to stop writing trillion dollar checks and abandon it's aspirations for national healthcare I would be prepared for some serious rate increases.  Based on history, double digits are not out of the question.
  • June 05 2009
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I don't have a crystal ball....But the real answer is the rates are still good so why take the risk in waiting?
  • June 05 2009
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Profile picture for SoCal Engr
Nice cut-and-paste...glad to see you've mastered [Ctrl-C] and [Ctrl-V].
  • June 05 2009
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Profile picture for zabca

Market Reaction Hints At False Note In Jobs Report

June 5, 2009, 12:19 pmhttp://blogs.barrons.com/stockstowatchtoday/2009/06/05/market-reaction-hints-at-false-note-in-jobs-report/
by Bob O'BrienWas there actually some hiccup - a statistical footnote, of sorts - in the better-than-expected jobs data? One that actually makes the report look not only not-as-constructive as initially interpreted, but one that would actually make the true picture of employment considerably worse than expected?Some traders certainly seemed to think so. While the S&P 500 (GSPC) opened to a brisk 9-point gain, the early advance faded relatively quickly. At its lows, the index dropped 8 points below Thursday's close, a 17-point pullback off the highs.There's been some suggestions that the payrolls report had been distorted by the way the Bureau of Labor Statistics accounts for business births and deaths. There's been talk that the birth/death model, a little-noted detail in the monthly report, came in with a huge statistical discrepancy for this month, effectively adding as many as 220,000 jobs to the reading.Anybody who made the purely mechanical assumption that the birth/death data distorted the overall reading, and added the 220,000 to the 345,000 job losses reported for May would have concluded that the economy actually shed 565,000 paychecks in the month. That would have meant the May labor report wasn't much better than expected - it actually would have been a disappointment versus the 525,000 job losses economists expected.There's some problems with this conclusion. According to Michael Feroli, JPMorgan economist, it's "incorrect on many levels to subtract the non-seasonally adjusted birth/death adjustment factor from seasonally adjusted payrolls to get a truer picture of payrolls."Start with the manner in which the birth/death statistics are compiled. Feroli noted that the adjustment is a two-stage process. Only the second stage is reported each month, and anybody analyzing the data, including traders, has seen only that part of the adjustment. They're not only leaving out the other part of the adjustment, they're leaving out the most-important part. Feroli described the unreported first stage of the adjustment as being "usually quantitatively more important." He's argued to the BLS that it should stop including the unseasonally adjusted number to a seasonally adjusted total because of the confusion it fostered.The market seemed to have digested and adjusted its reaction to the statistical anomaly relatively quickly. After the knee-jerk decline into negative territory, market averages erased the losses, and moved back into postiive territory.Still, the S&P is well off its highs for the session, suggesting that the market isn't taking the accommodating labor numbers at face value. In fact, rumors are circulating - apparently based on nothing more than the sheer expansiveness of the surprise reflected in the data reported - that the BLS reported a "bad" number. Poorly calculated. Flawed from the start. A statistician with a fat finger published "three hundred and forty-five thousand" meaning to actually punch "FOUR hundred and forty-five thousand." Whatever.In a conference call with reporters, Labor Secretary Hilda Solis said there was a rumor circulating in the markets that there was an error in the report, and that the data would be corrected. Solis denied there was anything amiss.Nevertheless, given the magnitude of the gap between what was expected and what was reported, the anticipation is going to be high a month from now that the May figures are going to be adjusted to show a larger number of job losses. Investors seemed to be tempering their enthusiasm to discount the anticipated adjustment.Or they're simply listening to traders who weren't positioned for such a surprisingly accommodating - at least versus expectations - number, and who have conducted the kind of rumor-mongering that could be expected.
  • June 05 2009
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Profile picture for SoCal Engr
That's almost an impossible question to answer. An easier question is:

"Do you need 4.5% to achieve your objectives?"

To many people "chase rates" without knowing why, other than "getting the lowest rate possible". With a little pre-planning, it's possible to know what your target rate(s) are, and then follow the rates - vice chase them.

We all want lower rates, because they equate to lower payments. We also want the "best rate possible". Too often, we don't take the time to identify "the highest rate that will meet my objective(s)". If your goal is to reduce your monthly payment by $X, and 5.25% will meet that goal, then why worry about 4.5? Sure, if you can get less than 5.25%...by all means, go for it. But don't let 4.5 cause you to miss 5.0, when 5.25 was what you really needed.

...which, personally, I think a lot of people did.
  • June 05 2009
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Profile picture for daveskow
In my opinion...I dont think we will see 4.5% type 30 yr fixed rates for a long time ......think we will settle in 5-6% range for awhile ...this guess is as good as anyones though:)
  • June 05 2009
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Short of a major Fed intervention at this point, I would say no. Recent economic reports indicate that it appears the worst of the recession is behind us, that we are now or already have bottomed out, and the economy will either stabilize or begin to improve. In addition, it appears the housing market is stabilizing in some areas, and is actually beginning to improve in others - but that's still to early to say with definitiveness. Only time will tell.
  • June 05 2009
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Thats a billion dollar question. There is no answer to that question, only speculation. I would say no. Money shouldn't be that cheap right? Everyone needs it and no one has it?
  • June 05 2009
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I hope so.  But if I were betting, I'd bet we're going up, hard, and fast.
  • June 04 2009
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Profile picture for shapiroamg
Maybe, maybe not. Tomorrow will tell a lot.
  • June 04 2009
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