Interest Rates dip slightly

Interest rates for buying a home on the Palos Verdes Peninsula decreased slightly this week.The following are excerpts from the newsletter on interest rates published by HSH Associates :

“The summer of stability for mortgage rates continued this week, with few signs that the flat pattern which has persisted for months will change significantly anytime soon.

The nation’s rising economic output has encouraged the Federal Reserve to slowly end their program of Quantitative Easing, where they have accumulated trillions of dollars of Treasuries and Mortgage-Backed Securities. A firming economy coupled with a less-accommodative Fed and accompanied by a very robust stock market would typically see interest rates running firmer than not, but various and emerging issues around the world have damped every potential uptick. A hot flare of escalation in the Russia/Ukraine troubles at week’s end fostered a fresh rush to safety in U.S. bonds; it if holds, we may see slight dip in the flat pattern for mortgage rates next week as a result.

Although the tenor of economic news this spring and summer has been broadly positive, we do see occasional flat spots in the data, prompting some disappointment about the strength of the recovery. One such report this week was Retail Sales, which managed no change at all in July, falling short of forecasts.

American mortgage rates continue to be more affected by global instability than by the domestic economy. Global and domestic investors alike continue to find plenty of reasons to pour money into the safety of U.S. Treasury offerings, perhaps moreso as sovereign bonds from other nations may offer relative safety (but yield close to nothing) or are risky and yield only about what you can earn here (and would prove much less liquid in a time of crisis). Even though our yields are low, these may be the best deal in town, all things considered, and with the world’s political and economic troubles unabated, we can expect to continue to see this influence for some time yet.

Given the end of week drama in Ukraine, rates will at least begin next week on a downward note. Low mortgage rates have proven only somewhat beneficial to reviving housing markets, and we’ll get some July data in that regard in reports from the home builders trade group, as well as a look at housing starts and building permits and existing home sales. For interesting reading, the markets will get a glimpse of the minutes of the last Fed meeting, and we’ll see a few other items by which to reckon things, as well. Slightly lower rates seem likely to be on tap for next week, with a 3-5 basis point slide in the offing. “

The following are interest rate quotes from American California Financial: