Archive for the 'interest rates' Category

Pounds VS. US Dollar in Interest Rates Expectations

The dollar exchange rate for pound is higher by 0.215% with 1 GBP being equivalent to 1.6288 USD. Similarly, the Australian dollar exchange rate for pound is higher by 0.368% with 1 GBP equal to 1.552 AUD. On the contrary, the euro exchange rate for pound is 0.216% lower with 1 GBP equals 1.6288 USD.

According to exchange rate analyst Adam Solomon at Tor FX, the British pound is rallying towards 1.63 versus the American Dollar despite the rumors that interest rates will increase quicker than FOMC.

Ahead of the minutes of the BoE that was recently released stated that the investors are predicting the MPC to increase the borrowing amount by 75 basis points in the next 12 months. Together with this, the Fed will continue to be unwilling to give extra-lenient policy measures.

Even though the inflation in UK has declined in the recently reported monthly figures, the prices of consumer products are still twice as much as the 2% target. Most of the attention will be focused on the GDP data of the first quarter. This data will be released in the coming weeks.

A positive comeback to the growth after the reduction in the fourth quarter will signal a returning speculation about rate increases in the month of May. When this increase happens, the Pound will be affected positively. As the pound increases, its impact to other currencies is not yet determined.

The currency in UK stays unchanged versus the Euro in the latest report. This occurred after reports came out that the manufacturing in Germany unexpectedly became better last month and resulted to more rate increases in the European Central Bank.

The single currency also showed gains against currencies that yield higher like Australian Dollar and New Zealand Dollar while Asian stocks declined and lowered the demand for assets that are riskier.

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30 Year Fixed Rate Mortgage Still Under 5%

The rate for 30 year fixed mortgages remained unchanged for the latest week as the rate remained below the 5% mark.

Mortgage giant Freddie Mac announced on Thursday April 7th that the rate of this week remained unchanged however last week the rate rose from 4.86% to 4.87%. The rate hit a 4 decade low in November of last year when it fell to 4.17%.

Meanwhile the rate for the 15 year fixed mortgage rose this week by 0.01% to stand at 4.10%. The 15 year fixed mortgage had also hit a 2 decade low in the November of last year when it fell to 3.57%.

Mortgage rates closely flow the yield on ten year Treasury notes. Low mortgage rates have not helped the home sales market which is struggling to recover from the economic crisis. KB home is the latest homebuilder that has announced a decline in net orders for homes in the last quarter.

The company which is based in Los Angeles California and operates in 12 states across the country released statistics this week which showed a decrease by 28% in houses that were delivered in the last quarter and a decrease of 32% in new home orders.

Lennar Corp last week announced its statistics for the last quarter and they also posted a 12% decline in new orders and a 3% decline in homes delivered.

The sluggish new home sales in the United States are due to the fact that prospective home buyers are hesitant to buy new houses because of stringent credit requirements, fears of getting laid off and not being able to repay mortgages and an expectation that home prices will fall because of large amounts of foreclosures still available in the market.

Mortgage rates are extremely unstable and can vary on a daily basis. Hence to calculate the average rate for the week, rates are measured across United States every day from Monday to Wednesday every week by Freddie Mac.
On a 5 year adjustable rate mortgage the average rate rose from 3.7% to 3.72%. This rate hit its lowest mark since 2005 last month when it dropped to 3.25%.

Meanwhile the average rate for the 1 year adjustable rate mortgage dropped from 3.26% to 3.22%. This rate hit its lowest in almost 3 decades 3 weeks ago when it stood at 3.17%.

Home Mortgage Interest Rates On Rise Says FED

The economy of the United States is not ready for an increase in interest rates a Federal Reserve official has claimed. Dennis Lockhart, the president of the Federal Reserve of Atlanta termed the current economic situation in the country too delicate to withstand a rise in interest rates.

He further said that the Federal Reserve would remain on schedule to finish its bond buying program before July and there was no reason in his opinion to deviate from this plan.

When reporters asked Lockhart that leaked minutes of the Federal Reserve’s latest policy meeting showed that some of the members had started considering an increase in Interest rates, he replied that it would be pre mature at the moment. Lockhart said that actually he had not even given it a thought for now.

While talking to reporters he explained that there was still some fragility in the economy as it tried to recover from the economic crisis. He further said there was no need to take a U turn on the current course that they were following. He was attending an Atlanta Federal Reserve conference in Stone Mountain Georgia.

The economy of the United States of America has shown some signs of recovery recently. It expanded by a little over than 3% in the fourth. Unemployment figures have improved quickly in recent months and have come down to 8.9%.

Lockhart said that inflation was still not a big issue for them and actually the rise in prices was a desirable event for policymakers. Many of these policymakers had shown concerns last year of a deflationary spiral occurring in the United States.

He said that the recent rise in prices were due to the mechanics of supply and demand rather than the interest rate policy of the Federal Reserve. However Lockhart did say he expected prices of commodities to become stable eventually.

Lockhart did however admit that he had not yet decided on a preferred plan about how the United States would break off from its loose monetary policy. He did say that the Federal Reserve would most likely take a look at a very aggressive plan proposed by the Philadelphia Federal Reserve.

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