Atlanta Real Estate Blog

Mortgage bond prices rose last week pushing mortgage interest rates lower.  The economic data continues to be mixed.  Personal income, outlays, and PCE inflation data were stronger than expected.  Trading was thin and erratic.  Thin trading conditions, news of the looming debt crisis in Dubai and a continued influx of Fed money into the mortgage bond market helped rates improve.

Interest rates finished the week improved by about 1/2 of a discount point.

The employment report will be the most important release this week.  This week there are many economic releases classified as very important or important.  Market volatility increases when these types of reports are released.  Be alert throughout the entire week.

Fed "Beige Book"

The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts.  The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings.  The report is used at the FOMC meetings, which tends to be one of the most influential events in the market.

Market participants are continually attempting to determine what FOMC interest rate policy will be ahead of the next meeting.  Any deviation from expectations usually results in extreme short-term market volatility.  The timing of the "Beige Book" provides analysts a valuable look at one of the many factors the FOMC considers in setting interest rate policy.  If the "Beige Book" shows signs of inflationary pressures, the Fed's ability to keep rates lower may be somewhat restricted.  However, if the report shows signs of difficulties, the Fed may keep rates low to stimulate the economy.

The "Beige Book" release on Wednesday should provide market participants with valuable insight into what the Fed will do and how mortgage interest rates will respond in the short-term.  Be cautious heading into this and the other important releases this week.

How Buyers Benefit From Market News

Any signs of economic weakness tend to result in good news for mortgage bond prices.  When mortgage bond prices rise, their mortgage yields fall.  When mortgage yields fall, mortgage increase rates are lower.  This means that a buyer can:

•         qualify more easily for a larger loan

•         enjoy a lower mortgage interest rate for the money borrowed

•         buy a more expensive home while having a lower monthly payment.

How Sellers Benefit From Market News

Any signs of economic weakness tend to result in good news for mortgage bond prices.  When mortgage bond prices rise, their mortgage yields fall.  When mortgage yields fall, mortgage increase rates are lowers.  This means your buyer can:

•         qualify more easily for a larger loan => so you can raise your home's price.

•         enjoy a lower mortgage interest rate for the money borrowed    => so more buyers can afford to buy your home.

•         buy a more expensive home while having a lower monthly payment => your home may sell faster because more buyers can afford it.

Tags: Mortgage bond prices rose last week pushing mortgage interest rates lower, interest rates fell by half a point, employment news, mortgage bond prices, mortgage interest rates, Federal Open Market Committee, FOMC, Beige Book,  low rates stimulate the economy, home buyers, home sellers, ATLShortSales.com.