Colorado Home Mortgage Loan

Colorado

Mortgage Rates are determined by the Mortgage Backed Securities market.  Most people refer to this market as the bond market.  The bond market competes with the equities market to attract demand from investors.  Colorado Mortgage Rates are determined by the demand shown in the bond market.  The relationship between Mortgage Backed Securities pricing and Colorado Mortgage Rates follow an inverse pattern.  The best way to look at the inverse relationship is to watch the price of bonds, when the price of bonds goes up, Colorado Mortgage Rates will fall. This will also hold true as bond prices drop, Colorado Mortgage Rates will naturally go up.  This trend does not change for any reason, so what we have to look for in order to properly determine Colorado Mortgage Rates, are the factors that increase or decrease demand in the bond market.

Demand in the bond market will normally be determined by investor’s adversity towards risk. Investors are inherently conservative and look for every opportunity to eliminate risk from their portfolios.  Colorado Mortgage Rates also use risk factors when determining its final rate which we will elaborate later.  Right now we will simply focus on the risk associated with investments. Bonds are considered safe and sometimes risk free investments.  Because the risk is low the returns are also low.  Equities (Stocks) on the other hand will have high risk associated with them, but in order to compensate for the risk, stocks will need to offer a much better return. Investors look at both markets and in times of bad economic progression bonds become a safer investment.  In times of good economic progression Stocks become a good investment. Colorado Mortgage Rates will typically come in lower during low economic growth periods and likewise Colorado Mortgage Rates will suffer during good economic growth periods.  So if you simply want to get a feel of where Colorado Mortgage Rates are in relation to historical data look at what is going on in the economy.

What is going on in the economy is heavily monitored by investors when determining how aggressive they will be in buying and selling bonds.  Economic data reports are the primary driver of investor behavior in the markets.  These economic reports come out in a verity of formats. Some that you may be familiar with are: GDP, Consumer Sentiment, Cost Price Index, and Jobless Claims just to name a few.  Colorado Mortgage Rates react immediately on the data released by these economic reports.  The economic standings are dictated by what is said in the data.  If the data says we are in an economic downward spiral investors quickly jump out of the equities market and reinvest in the bond market.  The increased buy demand drives to price of Mortgage Backed Securities up which drives Colorado Mortgage Rates down.  Obviously, Colorado Mortgage Rates have the opposite movement when the economic data released is better then expected.  This is how core Colorado Mortgage Rates are determined. 

The last component impacting Colorado Mortgage Rates are the loans risk parameters.  As I stated before investors demand a higher return when they take on more risk.  Colorado Mortgage Rates are no different in the returns required for the risk taken.  Colorado Mortgage Rates start off at a base risk factor.  Normally clients with a 720 or higher credit score, Full Documentation can be verified for their income, and a minimum of 20% down payment has been made will qualify under the least amount of risk.  These type of loans will certainly carry a low risk premium and will offer the best Colorado Mortgage Rates available.  Once the loan begins to add risk factors like 100% financing or credit scores below 720, Colorado Mortgage Rates begin to go up.  This is the most basic way to explain how Colorado Mortgage Rates are determined, and I would encourage you to contact us directly with any other Colorado Mortgage Rates questions you might have. 

Colorado Mortgage rates jump up again today on better then expected durable goods reporting.  Durable goods came in at -.5% which is a bit better then the -.7% forecasted by investors.  The key factor impacting Colorado mortgage rates were the core components in Durable Goods, which actually achieved a 2.5% growth rather then the .7% expected increase.  Investors viewed the data in a positive light giving new confidence for investing.  Colorado Mortgage rates increased as the demand for Mortgage Backed Securities dropped.  Right now we should be seeing Colorado Mortgage rates around 6.0%, which is the highest point achieved this month.  We will continue to monitor this closely.  Today we will continue to support a FLOAT recommendation.  Locking in now will only have you locking at this month’s highest point.  We are expecting a variety of economic reports over the next couple of days which will create movement in Colorado Mortgage rates.  The reports to watch for this week will be Core PCE and Chicago PMI.

The Personal Consumption Expenditures report is basically a measure of goods and services targeted towards individuals and consumed by individuals. There are two broad indexes of consumer prices in the United States: the Consumer Price Index (CPI) and the PCE index. They are similar in many respects, but there are some important differences which can lead to large gaps between CPI and PCE inflation rates at times. The PCE uses a chain index which takes into account consumers’ changing consumption due to prices, while the CPI uses a fixed basket of goods with weightings that do not change over time. Economists frequently focus on the Core rate, which excludes the volatile food and energy components.  The PCE is the Fed’s favorite inflation indicator and Colorado mortgage markets tend to be extremely sensitive to unexpected changes to the reported numbers. As inflation and expectations of future inflation rates change, the Colorado Mortgage markets adjust interest rates to reflect those changes. The effect of these changes is seen across all markets, equities, bonds and mortgage backed securities. As a general rule, higher inflation is negative for Colorado Mortgage rates.  

The Chicago PMI is measured by new orders, production, supplier deliveries, inventories and employment; asking for positive, negative or unchanged readings of each. A reading above 50% generally indicates that the manufacturing sector is expanding, and below 50% signifies contraction.  It is looked at as a good indicator for future inflationary pressures and can have a big effect on the markets. Changes in prices paid by manufacturers can be indicative of accelerating or decelerating inflation and future manufacturing activity can be predicted by changes in new orders. Strength in the manufacturing sector may be a sign of a strong economy and is usually negative for Colorado Mortgage bonds.

As I said over the last couple days, activity in the Colorado Mortgage rates market will be high this week.  Nothing moves Colorado Mortgage rates in any specific direction like inflationary pressures.  These reports will release inflationary numbers and the Colorado Mortgage market will react immediately.  If the inflationary numbers are high, Colorado Mortgage Rates will increase.  If the numbers come back lower then expected then a Colorado Mortgage rate recovery will be in place.  We will have to sit tight until Thursday or Friday of this week to see any real movement.  If you have some time check out www.coloradomortgagebanking.com/news I look forward in assisting you with your future Colorado Mortgage needs.

Daniel

Looking at the stock market this morning it has become very clear that Corporate profits will come in lower then expected.  Colorado Mortgage Rates should see some improvements by the end of the day.  When investors look for safe investments, Mortgage Backed Securities becomes a good choice.  We have not see a lot of data on Corporate profits yet, but insider trading should clue us in on what is expected.  These insiders tend to sell  just shortly before profits are reported and as you can see the market is currently down.  If the information coming out on Corporate profits were good news the market would be up right now.  Since the market is down we can only conclude that the information due out will be negative.   Colorado Mortgage Rates should see a nice improvement over the rates released this morning.  The only other obstacle we need to continue to monitor will be the supply of bonds being offered in the market.  The oversupply of bonds can off set any interest rate improvement expected in the next 24 hours.  Though this can be an issue, we should look at the reason why we have so many bonds being put on the market.  Maybe it is because the demand for these securities will increase in the near future.  Why will the demand increase?  Simply put these bond suppliers anticipate negative economic news in the near future and believe they will see prices increase for the bonds sold.  In the long run when the price of bonds increase interest rates will decrease.  This brings me back to my initial prediction that rates should improve by the end of the day and that we may have some good momentum in the near future.  FLOATING remains the recommendation in play, but remember if the rate makes sense to you then LOCK, rates are still pretty good in relation to rates over the last 2 1/2 years.  Call me with questions 719-314-1320  Best of luck

Daniel