After reaching the lowest levels in history, Texas mortgage rates have shot higher over the past two weeks. There is not a simple explanation for why this increase in Texas mortgage rates occurred, but looking at the many factors which are influencing Texas mortgage rates right now will help to understand what's going on.
Weak Employment data and increased expectations for Fed monetary easing were favorable for Austin mortgage rates this week. Investors have priced in a high likelihood of additional Treasury security purchases by the Fed, which would increase demand for mortgage-backed securities (MBS). As a result, Austin mortgage rates declined to a new record low.
Although daily volatility was high this week, Austin mortgage rates ended the week nearly unchanged. A steady stream of economic news was roughly neutral for Austin mortgage rates, as stronger than expected economic data was offset by solid demand for the week's Treasury auctions.
Weaker than expected economic data and continued low inflation helped Austin mortgage rates move a little lower from last week. In recent weeks, investors have modified their consensus outlook to reflect weaker economic growth during the second half of the year.
The economic data took a backseat to events in Europe again this week. Improved sentiment about the troubles in Europe influenced the willingness of investors to purchase riskier assets such as stocks, hurting bond markets. As a result, after dropping to the lowest levels of the year, Austin mortgage rates ended the week a little higher.
This week, uncertainty about the pace of the economic recovery caused investors to shift to relatively safer assets, including government insured mortgage-backed securities (MBS). Also positive for mortgage markets, the economic data released this week showed that inflation remains extremely low. As a result, mortgage rates declined during the week, reaching the lowest levels of the year.
Builders are jumping on the recovery bandwagon, as January Housing Starts beat consensus estimates, heading UP 2.8% to an annual rate of 591,000 units. Single-family starts are now 35.6% up from their low a year ago. Total new building permits dropped a tad in January, but single-family permits were up 0.4% for the month and UP 48.2% from a year ago.
Since the Fed meeting on Wednesday of last week, Austin mortgage rates have improved a little each day. There was no major economic data released during the week, and even a weak 30-yr Treasury auction on Thursday failed to stall the rally in mortgage markets. As a result, Austin mortgage rates ended the week moderately lower.
Stronger than expected economic data, solid earnings reports, and upward revisions to the Fed's growth forecast propelled the Dow stock index above the 10,000 level for the first time since October 2008. However, these same factors were unfavorable for Austin mortgage rates, and they ended the week modestly higher.