San Diego, CA (PRWEB) December 06, 2013
LoanLove.com is a trusted destination for current news and loan advice. The borrower advice website hosts a number of useful resources, informational articles and mortgage tools that can help both new and experienced home loan borrowers to find and obtain loans that they will love. With mortgage rates on the rise this December, and speculation that they could get much higher if certain factors play out, there are no doubt many potential or current home loan borrowers that are wondering just what is causing rates to rise. Loan Love gives some insight into the current situation and also provides some information on three of the biggest mortgage rate indicators which cause rates to rise and fall.
So, how high are rates rising? A December 4th report from Mortgage News Daily explains: “Mortgage rates moved higher again today, reaching levels not seen since September 17th--the day before the Fed Announced "no change" to QE asset purchases. The mortgage-backed-securities (MBS) that most directly affect rates stood ready to move either direction based on this morning's economic data. The most important report on the calendar was the ADP Employment Report, widely regarded as the best early indicator of the all-important Employment Situation Report due out this Friday. ADP's numbers were stronger than expected, causing markets to adjust their expectations for Friday. In this case, that meant selling MBS, which causes lower prices and higher rates.”
As shown by the above quote, interest rates are rising in reaction to (and sometimes even in anticipation of) the various economic reports that are being released this month. The most important factor here is the Employment Situation Report as it will have the most impact on Federal Reserve policy decisions in the upcoming FOMC meeting this 18th. But what does employment have to do with mortgage rates? A previously posted video from LoanLove.com explains how unemployment, along with two other factors, make up the three biggest rate indicators.
The video explains: “If you've been watching any financial news at all, you've probably noticed interest rates are climbing like crazy lately.... And a lot of people are wondering, will interest rates keep going up, or will they go down again soon? The short answer and most probably scenario is: rates will keep going up, and here's why.... Three of the biggest indicators that affect interest rates are the GDP (gross domestic product), CPI (consumer price index), and Payroll Employment --- The big picture is this: all of this alphabet soup--- GDP, CPI, and PE or Payroll Employment, are indicators of how well our economy is doing. All three of these indicators are tied to inflation. And when the Federal Reserve expects inflation, they RAISE interest rates. When our economy is stagnant, they LOWER interest rates.”
Loan Love explains that while the strong data coming in can be seen as good news for the economy overall, it is not great news for those who are looking for lower mortgage interest rates. Those who are interested in buying or refinancing a home would probably be best off locking in current rates, as the upward trend does not look like it will be stopping any time soon.
For more information, please watch the full video by clicking here.