Frank Nothaft Quotes (212 Quotes)

The general feeling in the market is that the economy may have bottomed out and recovery is in sight, ... It is just that sort of atmosphere that kept mortgage rates from falling last week. But if the economy begins to overheat and inflation becomes a threat once again, mortgage rates will almost certainly begin to rise in response. Currently, however, inflation is well contained and there is ample room for the economy to recover.

With mortgage rates continuing to slip, a new wave of refinancing has appeared. According to the Mortgage Bankers Association of America, applications for refinance jumped 15 percent last week, near the record high set in March. And according to Freddie Mac's quarterly refinance review, the average age of a refinanced loan fell to 1.9 years in the first quarter of this year.

The Producer Price Index (PPI) figures released today show an overall increase of 0.6 percent, but the core rose only a very modest 0.1 percent, indicating the actual rate of inflation is still very low, ... This good news points to a continuation of current affordable mortgage rates in the coming months.

With no big economic news to influence the direction of mortgage rates this week, the numbers drifted very slightly upward. We see this trend continuing throughout 2006, with the 30-year fixed rate mortgage ending the year at about 6.3 as the housing market eases back from last year's record setting levels toward a somewhat more normal rate of activity.

Going forward, homeowners wanting to use some of the equity in their homes for home improvement or other purposes will make up a larger portion of the refinance business.

Although the 30-year mortgage rate ticked up this week, which wasn't completely unexpected, it is still below last year's annual average and well below where it was at this time last year,

A tepid national economy has anchored mortgages rates to current low levels so far this year, ... However, according to the Federal Reserve's 'Beige book,' the housing industry is the only bright spot in the economy right now. That is primarily due to low mortgage rates.

Stronger than expected gains in the manufacturing and service industries - coupled with higher labor costs - ignited inflation concerns, which led to the rise in mortgage rates this week.

Meanwhile, home construction remains strong and home sales continue to break records easily. In fact, total home sales should end the year two percent higher than 2003's all time record level.

Previous years pale in comparison.

And when inflation is thought to be in check, mortgage rates naturally drift downward as they did this week.

Despite the gradual rise in mortgage rates over the last two months, housing starts were actually up in September highlighting the resiliency of the housing market. As a matter of fact, housing directly contributed to real GDP growth of 19 percent in the first quarter of the year and 23 percent in the second quarter.