Mortgage Apps Up; Oil Nears Record
A: The housing market is still hanging in there nationwide despite lending rates on 30YR fixed averaging around 6.8%, a four year high. Mortgage applications rose for the 2nd consecutive week as buyers seem to still be choosing to own rather than face rising rental costs. On a side note, energy prices quietly have trickled higher towards a record high, bringing back another inflation pressure for the fed to deal with.
According to CNN Money:
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.81 percent, up 0.01 percentage point from the previous week. Interest rates were just 0.05 percentage point below a four-year high reached two weeks prior.Out here on LI, I'm noticing an awful lot of FOR SALE signs as I drive around town and a noticeable amount of FOR SALE BY OWNER signs too. While I have nothing to compare it to as I have lived in NYC since 1999, family members tell me it is definitely more than usual.
As for lending rates, expect them to be flat-to-trickle higher as we get closer to the fed's next meeting in August. General consensus is for another 1/4 point rate hike but any economic data showing a slowing US economy might lead Bernanke to pause first, and raise rates at a later time. In my opinion, the fed still will have to deal with the lagging effects of higher energy prices as oil is now at record highs near $76/Barrel.
According to CNN Money again:
Oil surged to record highs near $76 early Thursday as worries over lower U.S. crude stocks were underlined by increased tension in the oil-rich Middle East and suspected explosions at a pipeline in OPEC exporter Nigeria. "Geopolitical risk is out of control," said Tony Nunan, a manager of risk management at Mitsubishi Corp.WHAT MAY HAPPEN WITH RATES: Watch out for the possibility that fed chairman Bernanke PAUSES with their 2+ year rate hiking campaign only temporarily, while they asses future economic data and the lagging effects of very high energy prices. As this happens, the fed can certainly RAISE RATES AGAIN IN THE FUTURE AFTER THE PAUSE should inflation prove harder to contain then first thought. The skinny, just because the fed pauses in the near future does NOT mean the next set of moves will be lower rates!"There's a pipeline attack in Nigeria, Israel is taking a strong stance and that's adding fuel to the fire, but more than anything it's U.S. gasoline demand holding up and the Iran situation."
