Seattle Mortgage Rates For The Week of February 22nd

Last week saw mortgage rates reach some of the highest levels we’ve seen so far this year.  With the homebuyer’s tax credit still around for the next couple months it’s on most buyers mind whether they’ll be able to get a rate in the upper 4′s or mid 5′s for their purchase.  The real estate market is showing some signs of recovery with housing starts exceeding forecasts, growing 590,000 in January, a 2.8% increase over December’s 560,000.  Building permits were very close to market expectations as they came in at 620,000 in January with a forecast of 630,000.  Those numbers as well as several items detailed in my blog post last week, FOMC Minutes & Producer Price Index, drove rates up and kept them there on Monday. 

BUT we started out Tuesday with some mortgage rate positive information in the form of the monthly Consumer Confidence Index which came out at a 10 month low.  The FDIC then announced that the problem bank list grew 27% from 552 banks to 702 banks in Q4 2009. That is the highest number of banks on the list since 1993 and doesn’t bode well for the overall industry despite the large banks being quite profitable.  At the same time again, the National Association of Realtors put out notice that we likely see no meaningful recovery in commercial real estate before 2011. Lawrence Yun, Chief Economist at the NAR said, ”Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher. With the job market expected to turn for the better later this year, we’ll see rising demand for office and warehouse space, but that isn’t likely before 2011.”   That’s three separate items which are all bond-friendly and positive for lower mortgage rates.  We saw the affects in the late part of the day as many mortgage lenders I send loans to were offering improved pricing and/or lower rates.

The rest of the week has major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Conventional and Government mortgages. 

I will be watching these reports and the effects they have on mortgage rates this week.  If there are any major surprises or changes to the market I will post about them.  In the meantime, we were around a “par” interest rate of 4.875% for 30 Year Fixed Conventional loan as of Tuesday’s close.   For those of you planning to purchase or refinance in the upcoming months, I encourage you not to wait until rates in the 4′s are a thing of the past.

Michael Pollock is an Accredited Buyers Representative, member of the Seattle King County Association of Realtors and Licensed Loan Originator in Washington.  He also works with clients in the Tacoma/Pierce County area – visit EXP there at www.tacomapowersearch.com