January 2012

Chicago Illinois Mortgage Rates Week in Review for the Week Ending 01/27/2012

Mortgage rates improved last week as the the Fed announced that interest rates will remain “exceptionally low” through late 2014. The Fed does not control mortgage rates. What they do control is the short term rates, the Fed Funds rate and the Discount Rate, which the big banks can borrow at. The Fed has kept rates at a range of 0 – .25%, but effectively 0%. The Fed has a dual mandate, to keep inflation under control, and to encourage employment. With rates this low, inflation hawks have been screaming that we are bound to have high inflation soon. By their statement this week, the Fed is saying this isn’t the biggest concern now. The Fed is saying that the economy remains weak, and the threat of falling back into a recession is a bigger concern. Part of this is obviously what is happening domestically, and trying to give a…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 01/13/2012

The big news from last week came out of – you guessed it – Europe. On Friday, Standard and Poors, the same organization that down graded the US bonds (to no real effect) announced the lowering of credit ratings for the bonds of nine European countries, including the second largest economy, France. This wasn’t a total surprise. S&P had hinted that they would do this a few weeks back, and bond yields throughout the continent have steadily been moving higher. But once they made it official more money poured out of Europe and into the relative safety of US bonds, and as a side benefit, mortgage bonds. The European Union is meeting for more economic discussions in about two weeks, and we are likely to see more fireworks then. Greece, whose problems were the first to show up, is not dealing well with its forced austerity, and there is a…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 01/06/2012

The monthly Unemployment report was released on Friday, and it came in better than expected with 200,000 jobs added in December, and the unemployment rate dropping from 8.7% to 8.5%. This is good news, and somewhat surprising as the rest of the world is going into a stall. The jobs report is usually the most watched report on the economic calendar, and good news like this would normally cause mortgage rates (and interest rates in general) to start moving higher. The reaction in the bond market Friday when the report was released was an initial increase in yield (which means higher rates), but this didn’t last more than a few minutes before the market turned and came back to the previous range. The stock market, which feeds on optimism, was also down, discounting the value of the jobs report. Though these numbers are the best we’ve seen since 2008, this…

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Chicago Illinois Mortgage Rates Week in Review for the Week ending 12/30/2011

Happy New Year! As we slip into the new year we can see a lot of changes, yet so much remains similar to where we were at this time last year. At the beginning of the year the Fed had started a new policy of Quantitative easing, and the markets were convinced that they would overshoot, leading to an inflationary spiral. This sent the stock market higher, while Treasury bonds and mortgage rates went up. The projected inflation never took off. The readings now are right inline with what they were at the beginning of the year, though there have been spikes in food and fuel costs, the overall rate remains low. At the start of the year, the big concern was that the United States was losing ground to the rest of the world. Since then Japan’s economy was devastated by the one-two punch of an earthquake and a…

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