With the release of new labor data from the federal government this week as well as opinions published from the Federal Open Markets Committee, a subset of the Federal Reserve, mortgage rates dipped lower this week, making the possibility of 3.375 a real, possible situation in the near future. The Reserve's FOMC put out in opinion what everybody already knew, the partisan war between Congress and the President has contributed to a slower economic recovery than what could have been. No surprise then, the Federal Reserve will continue to help support the economy by picking up troubled securities with government funds.
On the labor front, nothing new was seen to affect the direction of investment and lending. So, as a result, mortgage rates continued their slow-motion fall, drifting a bit listless in the markets absent any real motivation. The report release was a precursor for Friday's official employment data release, so the air has already been let out of the balloon, so to speak. No one expects any kind of change by Friday.What was of note, however, was President Obama's pick for the appointee Director position of the Federal Housing Finance Authority. The choice of Mel Watt signals a direction to loosen up mortgage criteria further in Fannie Mae and Freddie Mac, potentially bringing in further federal funding of mortgage help to homeowners, reducing what they owe. That in turn is seen as a punch to mortgage-backed securities which depend on homeowners payment their original loans versus being forgiven an amount through government intervention.
As a result, for May 2 the 30-year fixed mortgage average has now floated down to the range of 3.375 to 3.5 percent. The 15-year counterpart is in a tighter range of 2.75 to 2.875 percent, and the 5-year adjustable rate mortgage average is unmoved at 2.625 to 3.25 percent.