San Diego Mortgage Rates improved a little this last week due to some dovish comments by the Federal Reserve and some weaker economic reports. The bond market though, is still stuck in a downward trend, which means San Diego mortgage rates could continue to rise over time.
The Federal Reserve has been purchasing $85 billion a month in Mortgage Bonds to help decrease unemployment and stimulate the housing market and the economy. Last week, Fed Chairman Ben Bernanke testified before congress and stated that these purchases are by no means on a preset course and the Bond buying could be reduced at a faster pace, a slower pace, or even increased for a time, depending on the economic outlook.
Bernanke also mentioned deflation last week for the first time in many months. This could pave the way for QE to last into 2014. These comments were more dovish than in the past and helped the bond market rally.
Other key data that was released last week included the Consumer Price Index which rose by 0.5 percent from May to June due to rising prices in gasoline, food, clothing, medical costs and housing.
This reading was above expectations and the second highest number recorded this year. It is important to note that the year-over-year Core CPI (the reading that strips out volatile food and energy prices) went down slightly, which is likely why the Fed continues to say inflation remains tame.
In the housing market, Housing Starts declined by close to 10 percent in June from May. This was far below expectations and the lowest level since August 2012. The drop was attributed to a big decrease in apartments. Building Permits, which is a sign of future construction, also fell by 7.7 percent, below expectations.
Continuing the weaker reports, Retail Sales in June declined to 0.4 percent from 0.5 percent in May. Retail Sales make up 30 percent of consumer spending and can have a huge impact on the economy.
The most recent Jobs Report showed a lot of part-time jobs were created and confirmed that wages for most people have not grown at all. Without increases in wages, we should not expect any robust Retail Sales or pickup in economic activity. This is another aspect the Fed will be watching as it makes decisions regarding QE.
How did this affect San Diego Mortgage Rates?
As stated above, the weaker economic news and Fed comments allowed Mortgage Bonds to take a breather and recover some recent loses. This allowed San Diego Interest Rates to improve by .125% – .25%.
I just locked in a rate for a client on a 30 year fixed for a refinance of $415,000 on a condo. The loan to value is 75% and the credit score is over 736. The rate is 4.49% at 0 points and an APR of 4.536%. The payment is $2,100.28.
Although, this rate is not as low as a few months ago, historically it is still great. As a San Diego Mortgage Broker, I have to remind clients that just 8 years ago rates were in the 7% range for 30 year fixed Loans in San Diego.
What Could Affect San Diego Mortgage Rates This Week?
There are several key housing reports that will be released this week.
- Existing Home Sales data kicks off the week on Monday and New Home Sales will be released on Wednesday. The reports come after last week’s big drop in Housing Starts.
- As usual, Weekly Initial Jobless Claims will be reported Thursday. Last week’s claims fell by 24,000 to 334,000, but the decline was due in part to factories undergoing their usual summer shutdown for a few weeks.
If you are interested in getting a San Diego mortgage rate quote, please click HERE or feel free to give me a call at 619-312-0612. I am a San Diego Mortgage Broker who specializes in closing loans on time with great customer service and I look forward to helping you secure the best loan possible.