Mortgage Rate Update July 11, 2016

Mortgage rates are now back at the all-time low levels established in November of 2012.

Normally when the US stock market rallies mortgage rates suffer.  However, these are not “normal” times.  Following the “Brexit” vote investors around the globe have been seeking “safe haven” in the US financial markets.  As a result, money from around the world has been pouring into our bond market, helping mortgage rates improve, and our stock market, pushing values higher.

A further signal that the financial markets are not behaving in a “normal” manner is evidenced by Friday’s all-important jobs report.  The report showed that the US economy added 287,000 new jobs during the month of June far exceeding expectations of +170,000.  Under normal circumstances a stronger than expected employment report pushes mortgage rates higher but they barely budged.

Low mortgage rates are creating a wave of new loan applications in the mortgage industry.  Last week the Mortgage Bankers Association reported that the volume of new applications for home loans increased by 14% thanks to new inquiries for refinancing increasing by 21%.  This does not bode well for appraisal turn times which are already at ~4 weeks for the Portland-metro area.

Looking ahead, the economic calendar is fairly light this week.  The highlights will come on Thursday and Friday when we’ll see a fresh set of inflation data.  From a technical perspective interest rates in the US look ripe for reversal but these signals which would be alarming in “normal” times may not play a role.  Nevertheless rates have essentially never been substantially better than they are today.  Let’s lock!

Current Outlook: locking bias