For quite some time homeowners have seen average 30 year fixed home loan rates under 4%. Since the beginning of June 2012 fixed loan rates have bounced between 3.45% and 3.6%. On Friday, June 22nd, 2012 average 30 year loans closed at 3.53%. Remember that the 10 year treasury rate yield has moved higher for much of June so mortgage rates will likely move up during the beginning of July.
Current 10 Year Treasury Rate Yield Moves Above 20 Day Moving Average
Most technical analysts agree the 20 day moving average is one of the best indicators of short term movements in stocks and bonds. The 10 year yield recently pushed above its 20 day moving average and is slightly below its 50 day moving average. The current 10 year treasury rate yield is at 1.67% and the 50 day moving average is 1.77%. Note that the 50 day moving average is moving down so it will hit 1.75% over the next few days.
Since 1971 the 10 year yield has helped to move average 30 year fixed rate. This strong correlation has remained even though the Federal Reserve Bank has done everything possible to keep interest rates at historic lows. With this being true most expect to see 30 year fixed rates moving up to around 3.75% in the very near future. This is still very low when looking at a multi decade chart of fixed home loan rates.
Financial Stocks End June 22nd Week Unchanged
After some ups and downs on the stock market last week the XLF finished unchanged. There were several days in which financial stocks lead the market but the strong move lower on Thursday took away most gains. Some banks have worked very hard to get back to pre credit crisis profits levels. Very strong banks are avoided unsecured installment loans for bad credit borrowers as the default rate is very high. The interest earned on these types of loans is quite impressive but a large percentage of borrowers will end up never paying this interest.
Photo by Tony Webster via Flickr
Borrowers often seek secured credit cards as a way to avoid installment loans or payday loans. Big banks like Wells Fargo, Bank of America and Chase continue to avoid offering any type of very bad credit loan. This does not mean that some of the local community banks are not going to jump into installment loans quickly. There are a few very bad credit lenders that are doing very well as they force borrowers to put up some type of collateral. It will be interesting to see where bank profits come from in the near future.