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What’s Ahead For Mortgage Rates This Week : December 10, 2012

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FOMC meets this weekMortgage bonds worsened last week as Fiscal Cliff talks moved closer to resolution and as the U.S. economy showed continued signs of growth.

Conforming mortgage rates in Minnesota rose slightly, edging off the all-time lows late in November.

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate conforming mortgage rate was 3.34% last week for home buyers and refinancing households willing to pay 0.7 discount points at closing plus a full set of closing costs.

Freddie Mac also showed the 15-year fixed rate mortgage averaging 2.67% with an accompanying 0.7 discount points plus closing costs.

1 discount point is equal to 1 percent of your loan size.

The two big stories that moved rates worse last week were the Fiscal Cliff talks and the November jobs report.

With respect to the Fiscal Cliff, mortgage rates worsened as Capitol Hill moved closer to a deal which would avoid the dual-event of expiring U.S. tax break and a mandated government spending rollback. These events are both scheduled to occur December 31, 2012.

Some analysts believe that these two events — in unison — could slow U.S. economic growth to the point of recession. Other analysts aren’t so sure. However, Wall Street is choosing to be cautious. This is why a break in talks has been good for mortgage rate shoppers of late; and why steps toward avoiding one or both scenarios has been bad for rate shoppers.

Mortgage rates often rise when economic growth is expected. This explains why November’s jobs report pushed mortgage rates worse Friday, too — Wall Street underestimated the Non-Farm Payrolls report which showed 146,000 net new jobs created, and didn’t expect to see the national Unemployment Rate drop to 7.7%.

This week, mortgage rates may rise again with new inflation data and a Retail Sales report set for release.

The big event, though, is the Federal Open Market Committee’s 2-day meeting scheduled, set to begin Tuesday. The FOMC is not expected to add new economic stimulus, but the Fed’s words can carry as much weight as its policies and actions.

The Fed will issue a statement to the markets at 12:30 PM ET Wednesday, and will host a press conference shortly thereafter. Mortgage rates are expected to remain volatile all week.

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Energy-Saving Tips For The Holiday Season

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Energy-saving at holiday timeWith the holiday season comes more than colder weather — there are the parties, the baking, the fixing of family dinners, and, in some cases, the stringing of holiday lights. It’s also a time of year when home energy use can spike, leading to a very large January electricity bill.

This year, do what you can to conserve energy through the holidays and the New Year. Try following these simple tips.

Go LED
If you string lights outside of your home, try LED (Light-Emitting Diode) lighting. LED lights use 86% less electricity than comparable incandescent lights and have numerous safety advantages. For example, LED lights are shatterproof, present no fire hazard, and, because they emit almost no heat, are safe to the touch.

Reduce Your Home Thermostat
When you home is filled with people, or the ovens are working overtime, or both, the temperature can rise by several degrees. Rather than opening a window or leaving a door ajar, consider lowering your home’s thermostat, or turning off the heat altogether. Each degree “colder” that you set you set your thermostat decreases your home’s energy usage up to 3 percent.

Plan Your Meal
Holiday meals are often prepared in advance of dinner and then reheated or warmed to be ready for company. This leads to running the oven, microwave or stove-top multiple times for each served dish. When possible, prepare foods at the same time and warm in the oven at the same time. In running your appliances less, you will save on energy costs.

Use Your Dishwasher At Capacity
Some dishes require hand-washing. For everything else, use a dishwasher. Dishwashers use less water than is required to wash and rinse plates, utensils and pots and pans by hand. They can also use up to 50% less energy than is required to heat the water you’ll need to wash your dishes manually.

The holiday season can be full of excesses. Don’t let your energy bill be one of them.

November 2012 Non-Farm Payrolls Report May Show Hurricane Sandy Effects

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Non-Farm PayrollsFloating a mortgage rate? You may want to consider getting locked Thursday.

ADP released its November 2012 Employment Report Wednesday in which the payroll-processing firm reported 118,000 new jobs created last month.

The company said the service sector created 114,000 new positions, the construction sector created 23,000 new positions, and goods-producing businesses created 4,000 new jobs, among others. There was a 16,000 decline in manufacturing employment.

ADP’s monthly Employment Report can influence mortgage rates. This is because it’s typically released during the same week as the Non-Farm Payrolls report from the U.S. Bureau of Labor Statistics, and can sometimes provide a preview.

The Non-Farm Payrolls report — more commonly called “the jobs report,” is a sector-by-sector breakdown of the U.S. employment situation, which includes changes in the national Unemployment Rate.

In a recovering economy, as jobs go, so goes the economy and, this month, the jobs forecast is clouded because of the effects of Hurricane Sandy.

In its Employment Report, ADP estimates that Hurricane Sandy reduced payrolls by 86,000 jobs across manufacturing, retail, leisure and hospitality, and temporary help industries.

Without Hurricane Sandy, the report may have shown north of 200,000 new jobs.

Prior to Wednesday, Wall Street expected Friday’s Non-Farm Payrolls report to show 93,000 net new jobs created in November, and no change in the U.S. Unemployment Rate. The ADP report did little to change those expectations.

Regardless, Friday’s release remains a market risk to Minneapolis buyers. The jobs report is closely watched because of its links to the broader domestic economy. When more workers are employed, more income is earned, and more money is spent.

This drives economic growth, of course, because consumer spending accounts for 70% of the U.S. economy and when the economy is expected to expand, mortgage rates tend to rise.

If you are currently in the market for, or are undecided about a mortgage, therefore, consider locking your mortgage rate today. If Friday’s Non-Farm Payrolls report shows more jobs created than were estimated, mortgage rates are likely to rise — maybe even sharply.

Non-Farm Payrolls is released at 8:30 AM ET.

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