Interest Rates Yo-Yo down a bit this week

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

“An ongoing litany of economic data suggests that we’re back on a growing path after a rough winter; that stumbling period produced some of 2014’s lowest mortgage rates. However, in recent weeks the temperature of the economic data has tuned decidedly warmer, and it is supposed that mortgage rates would be firming along with the economy… except they’re not.

Even a typically market-moving report like the one covering monthly employment metrics seems to have had little immediate effect on interest rates. Do the markets not trust the information of a rebounding economy? Is it that, for every solid piece of data, there is sufficient nagging concern as to cause it to be discounted in some way? Certainly, there have been some regular offsets to stronger reports, but they seem to be dwindling in number, and important indicators appear to be moving in the right direction, and have been revised upward more often than not.

Global issues of course continue to play a role as a slower expansion in China and the ongoing Ukraine drama have seen investors interested in parking more of their funds in Treasuries, and it also may be that sky-high stock market is seeing some folks employing the old “sell in May and go away” strategy. Whatever the reason for the relative tranquillity for mortgage rates, we cannot help a sneaking suspicion that without some regular upward trend for rates that pressure is building, making a pop higher in rates more likely than a more muted progression at some point.

“The ongoing beat of “better than it was, if still somewhat erratic” economic data continues. A growing economy despite a less-accommodative Fed (or, inversely, a less-accommodative Fed because of a growing economy) should be a key for firming interest rates. Why they have not yet emerged is a conundrum, but one which will fully reveal and no doubt resolve itself as we wend our way forward. There remain no indications that any spike in rates is imminent, but without regular, small increases, it does seem to us that some pressure may be forming, and a rise in rates expressed in rapid fashion at some point. Even so, we don’t expect rates to break out of the current range we’ve been holding now for six months or more, but we should be expected to move more toward the upper end of the range than hold the bottom, if things continue as they have been.

A lesser bit of new data on tap next week. We can’t help but think that there will be at least some move upward from this week’s slew of data, but we appear most likely to hold pretty steady again. “

The following are interest rate quotes from American California Financial: