US stock market rally pressures mortgage rates higher

Think owning Portland real estate is a great investment?  Try purchasing a professional sports franchise.

The late Paul Allen purchased the Portland Trail Blazers in 1988 for $70 millionAccording to recent reports the Trail Blazers franchise is currently worth $1.6 billion.

Ignoring annual cash-flow the team has appreciated at a 10.6% annualized rate over that time (which outperforms housing).

The Blazers will try and outperform their 1st round opponents tonight at the Moda Center and advance to the 2nd round of the NBA playoffs.  Go ‘zers!

Mortgage Rates

Home loan rates have been trending modestly higher since the end of March.  They have increased .125%-.25% which is not a surprise given that during that time the yield on the US 10-year treasury note has increased from 2.37% to 2.57% (+.20%).  Mortgage rates tend to track changes in the the 10-year treasury note yield.

Technical Signals

The US 10-year treasury note has been trading at its 50-day moving average for the past week.  The technical signals suggest that bonds are oversold which means that yields may improve in the coming days.

That said, if yields break above this level then mortgage rates are likely to worsen by another .125%-.25%.

US Stocks

Much of the reason interest rates have suffered during the month of April is because the stock market has been rallyingStrong earnings from various companies have pushed investors into stocks and US indexes are now hovering near all-time highs.

The Week Ahead

The remainder of the week is relatively light on economic news so I expect markets to react to technical signals.  Given that momentum is working against us I think the safe play is to lock so will remain with that bias.  That said, I am hopeful the aforementioned technical levels can help interest rates improve.

Current Outlook: locking bias

As stocks rally mortgage rates pressured higher

Think your life is busy?  Each year the IRS receives over 290 million tax returns which the IRS receives.  According to the IRS only .50% of all filed tax returns are audited.

The IRS also reports that over 9,000 tax returns are filed where the taxpayer makes more than $200,000/ year but pays $0 income tax.  Has the President released his tax returns yet?

Stock Market

Earnings season is underway and analysts expect in aggregate that corporations will report stable or declining profits compared to last year.

However, financial companies appear to be bucking that expectation.  Last Friday Chase Bank reported better than expected financial results and earlier today Bank of America did the same.

The US Stock market has now completely recovered the declines it incurred at the end of 2018 and the S&P 500 is only 35 points away from all-time highs.  If profits fail to grow and stock prices continue to rally it may reignite concern over valuations which I wrote about last summer (HERE).

Mortgage Rates

As stocks rallied last Friday it pushed mortgage rates up by ~.125%.  See why HERE.

10-year treasury note

The yield on the US 10-year treasury note is currently trading at 2.58% which just below an important technical layer of resistance.  If yields break above this level then I expect mortgage rates to increase an additional .125%.

The Week Ahead

The economic calendar is heavy on new residential construction this week.  Earlier today the Home Builders’ Index was released and showed greater optimism amongst home builders compared to last month.

On Friday we’ll see fresh numbers for building permits and new housing starts.

Current Outlook: locking bias

Mortgage Rates Hold Steady at Multi-Month Lows

In 1930 two men spent $70,000 to buy 365 acres from Fruitland Nurseries Inc. with the vision of building a new golf course.  They hired an architect from Scotland by the name of Alistair MacKenize and by 1933 the course was ready for play.

Fast forward to today and Augusta National Golf Club is one of the most exclusive golf courses in the world.  Starting on Thursday it will play host, as it does each April, to the Masters Tournament and the champion golfer will don the signature green jacket on Sunday afternoon.

Mortgage Rates

Home loan rates are holding steady from last week.  Similarly the yield on the US 10-year treasury note has been almost flat at ~2.5% since the beginning of April.

Jobs Report

Last Friday the Bureau of Labor Statistics released the monthly employment report. It showed that 196,000 jobs were created during March and the unemployment rate held steady at 3.8%.

For the financial markets the results were “Goldilocks” in that they were not too hot, which could have pressured rates higher, and not too cold which may have stoked fears of an economic slowdown.

Brexit

With the original Brexit date of March 29th come and gone EU leaders are meeting on Wednesday to decide if an extension will be granted.  Without an extension Britain will leave the EU on Friday without a trade deal.  Most analysts think an extension will be granted but for how long is not known.

Uncertainty from the Brexit proceedings have helped US interest rates remain low.  Any signals for a quick and orderly exist could pressure rates higher.

The Week Ahead

This week’s economic calendar heats up on Wednesday when the Consumer Price Index and minutes from the last Federal Reserve meeting are released. Recently mortgage rates have not reacted well to Fed meeting minutes.  Speaking of the Fed, Chairman Powell is schedule to give three speeches this week.  His comments can always influence the markets.

Current Outlook: floating

Improved Mortgage Rates – Should I Refinance?

Mortgage rates are at their best in over a year. Does that mean you should refinance?

There are a few different factors that you need to consider before making the decision to refinance.

Watch this week’s video to learn more.

 

Questions or comments? Please reach out at www.swansonhomeloans.com OR 503.488.1808.

I’d be happy to help! Thanks!

Rates remain low, home prices continue to rise

Happy National Peanut Butter & Jelly Day.  I wish I had more time to celebrate but my schedule is JAM packed!

Mortgage Rates

Home loan rates continue to hover at 13 month lows.  Although economic data out on Monday was relatively strong there are still concerns over Brexit and future growth which is helping US interest rates remain low.

Home Prices

Earlier today CoreLogic released its monthly Home Price Insights Report.  It showed that nationwide home prices increased by 4% from last year.  This marks a slowdown from prior years but they also foretasted that for the next 12 months home prices would increase by 4.7%.

Idaho lead all states with +10.2% year-over-year appreciation.

Interest Rate Forecast

Embedded in the aforementioned report CoreLogic Chief Economist Frank Nothaft said, “….the Federal Reserve’s announcement to keep short-term interest rates where they are for the rest for the year, we expect mortgage rates to remain low and be a boost for the spring buying season.

The Week Ahead

Being that it is the first week of a new month we will get the all-important jobs report this Friday.  Analysts are expecting +179,000 new jobs for the month of March and the unemployment rate to remain at 3.8%.

I am a little concerned that interest rates are overdue for a reversal so am going to recommend locking ahead of Friday.

Current Outlook: locking

Should I buy or rent?

Tired of paying rent and wondering if homeownership is right for you?  There is no doubt that owning your home can significantly improve your financial standing in the long-term.

In fact, a recent survey showed that homeownership was a greater predictor of net worth than age or education (see HERE).

In this video I talk about some of the benefits and risks of owning a home:

If you’d like to learn about your options for buying a home in a no pressure environment please contact me today to schedule an initial conversation.

Thanks!

6 home loan details to prepare prior to making an offer

Have you found the home you love and now you’re ready to make an offer?  There are six details you should be prepared to communicate to your Realtor to insure the transaction goes smoothly.

Watch this short video to learn what they are:

If you are wanting to work with a lender that is dedicated to delivering home loans without surprises please contact us today!

Thanks!

Mortgage rates improve to best levels in over 12 months

If fruit grows on a fruit tree then what does chicken grow on?….A poultry.

Today is National Poultry Day which means that turkey sandwich you consume for lunch is actually your way of celebrating.

Mortgage Rates

Mortgage rates continue to improve reaching the best levels in over a year.  Whether or not they continue to improve or reverse higher will likely depend on the Fed’s comments due out tomorrow.

The Fed

The Federal Open Market Committee meets every six weeks and generally speaking their announcements tend to fall in line with analysts’ expectations.  In other words, there is typically not much uncertainty headed into a Fed announcement.

However, that is not the case for tomorrow when the Fed concludes its regularly scheduled two-day meeting.  For many months the Fed has allowed $4 trillion to fall off its balance sheet in an effort to unload assets it acquired during the economic recovery.

However, the Fed announced earlier this year that it may decelerate the pace at which its balance sheet shrinks by reinvesting some of the proceeds it receives back into the fixed-income markets.

Translation: If the Fed begins to buy up treasuries and mortgage-backed securities they would create significant demand that could help drive yields lower.

What to Expect

If the Fed announces tomorrow that they will immediately begin to reinvest into the fixed income markets I would expect mortgage rates to improve.

However, I fear that the markets have already priced an aggressive announcement from the Fed.  If the Fed delivers a more gradual message then we could actually see mortgage rates rise.

The Week Ahead

Aside from the Fed’s announcement due out on Wednesday the remainder of the economic calendar is light.  I recommend a locking bias headed into tomorrow.

Current Outlook: locking

Part 2: How to Buy a Home Without a Sale Contingency – Down Payment

Over 60% of homebuyers in the United States are repeat buyers.  This means they often have a home to sell concurrently with buying a home.  In today’s competitive housing market it can be a challenge to get an offer accepted when it includes a home sale contingency.

Therefore, it’s always worth trying to see if and how a homebuyer can be pre-approved for their home loan without the requirement of a home sale contingency.

There are two common hurdles that an applicant faces when trying to get pre-approved in this manner.

The second hurdle (HERE IS A LINK to the first hurdle) is cash flow.  Without the existing home sold the underwriter will require that the applicant be approved with both mortgage payments.  I cover that topic in the video below:

If you are seeking to get pre-approved to buy another home and would like to avoid a home sale contingency please reach out to us today!

Economic Headlines are Mortgage Rate Friendly

St. Patrick’s Day is this coming Sunday which may have you thinking if you should look at borrowing money from a leprechaun instead of your favorite mortgage lender?  Well, you can but last time I checked leprechaun’s are always coming up short……

Mortgage Rates

Home Loan interest rates remain at 10-month lows.  Might they go even lower?  Some of the current economic headlines are interest rate friendly.

Jobs Report

As I wrote in last week’s post I was very keen on seeing the results of Friday’s all-important employment report.  Initially when I saw the unemployment rate drop from 4.0% to 3.8% I was concerned that mortgage rates may rise (good news for the economy tends to be bad news for rates).

However, according to the report only 20,000 jobs were added to the US economy in February and analysts had been expecting +170,000.

Overall the results were disappointing which is favorable for mortgage rates.

Inflation Data

Earlier today the Labor Department released the Consumer Price Index (CPI).  Year-over-year prices increased by the slowest clip in over two years (+1.5%).  If you strip out volatile food & energy prices the core CPI increased by 2.1%.  These are considered “tame” price increases which is good for mortgage rates.

Outlook

The remainder of this week’s economic calendar is relatively light.  The highlights include the Producer Price Index and Durable Goods on Wednesday followed by New Home Sales and Consumer Sentiment on Friday.

I recommend maintaining a floating position.

Current Outlook: floating