Tag: portland mortgage broker

Mortgage Forbearance relief and how it is impacting consumers

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

My Neighbor’s House

My neighbor put their house on the market at the beginning of March for $700,000 and due to the COVID-19 outbreak has had very little traffic.  Over the weekend, just when they thought there was no hope of selling their home a group of pranksters teepeed their house.  Now they are under contract for $5.7 million!

(I thought a little real estate humor may help boost your spirit today!)

Conventional & Government Rates Diverge

Conventional mortgage rates are mostly unchanged from last week but government interest rates have spiked!  There is less investor appetite for government loans at this time because it is perceived that the performance of these loans given the current economic conditions will be difficult.  The assumption is that a greater number of FHA, VA, and USDA borrowers will request forbearance relief which hurts the mortgage servicing entity.  Speaking of forbearance…..

Forbearance

Have you heard from any of your past customers regarding forbearance options?  If not, I can almost certainly guarantee you will in the coming days.  In this week’s video I provide a summary of what I think consumers should consider when making a decision regarding forbearance options.


Please feel free to share this with others!

Current Outlook: floating

Mortgage rates shift and appear to be moving higher

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
Home Loan Rates

Despite the fact that the Coronavirus continues to spread mortgage rates appear to have hit an inflection point and are moving slightly higher.

Virus in China

According to reports there are now over 20,000 confirmed cases of the deadly Coronavirus (twice as many as this time last week).  The disease continues to pop up across the globe but is primarily concentrated in China.

Home Loan rates have touched multi-years lows as fear has spread into the financial markets encouraging investors to seek “safe-havens” including the US fixed income markets.  The additional demand has driven interest rates lower.

Stock Market

US stocks are rallying today as investors bet on the long-term resilience of the global economy.  The Dow Jones Industrial Average is up over 1.5% (430 points) in early trading.  When stocks rally it tends to put upward pressure on interest rates.

The Fed

As expected the Fed left rates unchanged when they met last week and their monetary policy comments were mostly unchanged from their previous meeting.  At this point, I do not expect the Fed to hike or cut interest rates in 2020.  Of course, this does not mean that mortgage rates will remain flat because the Federal Funds Rate does not directly impact home loan rates.

The week ahead

The economic calendar heats up this week.  The most important release will come Friday when we get the all-important jobs report.  Analysts are currently expecting 165,000 new jobs to be reported for January.  There are also a couple Fed officials giving speeches throughout the week.

From a technical perspective it appears that interest rates may have bottomed out on Friday of last week and will start trending higher.  I will shift to a locking bias but if the spread of the Coronavirus accelerates then rates will likely dip again.

Current Outlook: locking

Fear over Coronvirus drives home loan rates lower

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
Home Loan Rates

In the past 10 years there are only three times when mortgage rates have been lower than they are today.  Interest rates continue to benefit from a “flight-to-safety” in reaction to the Coronvirus outbreak.

Virus in China

Over 4,500 cases of the Coronvirus have been reported in mainland China.  There is still a lot of fear about the potential for the illness to spread and cause more severe health impacts around the globe.  Thus far there have been less than 100 known cases of Coronvirus outside of mainland China.

Should the outbreak become more severe then we  may see rates go even lower.  However, if the virus appears to be contained then I would expect mortgage rates to increase slightly.

Stock Market

US stocks are off about 2% of recent highs which has pushed capital into “safer” havens including for mortgage-backed bonds which has helped drive mortgage rates lower.

Housing News

Earlier today the Case Shiller Home Price Index was released.  The report showed that over the past 12 months home prices in the 20-city composite, of which Portland is included, increased by 2.6%.

Yesterday we got numbers for new home sales.  Although the number of new home sales declined in December from the prior month, they were still up 10% for 2019.  Given that there is still an acute shortage of housing in many of the major west coast metropolitan areas an increase in new home sales is welcome news.

The week ahead

It’s Fed week which means we’ll hear from the Chairman Powell on Wednesday.  The Fed is not expected to change its tune regarding monetary policy but we always need to stand guard for changes to their wording.

Current Outlook: floating

 

Weakness in stocks is helping home loan rates remain low

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
Home Loan Rates

Although mortgage note rates are unchanged from last week the associated closing costs are slightly lower so in fact the rate environment has improved.

Stocks and home loan rates

Weakness in the stock market is helping mortgage rates improve.  Why are stocks suffering?

Virus in China

Over 300 people in China and Taiwan have been infected with the coronavirus which health officials fear could spread into a pandemic.  The outbreak is happening just before the lunar new year when over 400 million Chinese citizens are expected to travel.

The health scare is causing a flight-to-safety in the Asian financial markets.  The Hong Kong stock index was down ~3% today which is creating demand for US-based fixed-income securities and driving down yields.

Stock Valuations

Citigroup conducts a statistical model which measures stock market sentiment.  As of today the model has reached a level they define as “Euphoira”.  80% of the time when this model reaches this level stock prices are lower 12 months later.  Furthermore, the last time this model hit this level was April of 2019 and stocks declined 7% the following month.

Furthermore, the Shiller Cyclically Adjusted Price to Earnings Ratio is currently back above 30 for the first time since 2018.  Prior to 2018 the only other times stock valuations had reached this lofty level was 1929 and 1999.

Should stock prices retreat it will likely help mortgage rates remain low.

The week ahead

This week’s economic calendar is light.  The only significant highlight is the existing home sales report due out on Wednesday.

Momentum appears to be on our side so I will recommend a floating position.

Current Outlook: floating

Can interest rates go even lower? A long-term view suggests they can…..

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
A long-term view of rates

If you took out a mortgage in the 1300s then it’s probably time to refinance.  A new working paper from the Bank of England looks at a trend in global interest rates over the past eight centuries.  

The findings show that interest rates have been trending lower over the past ~800 years.

Should the trend continue then our grandchildren receive interest (negative interest rates) when they borrow money.

Home Loan Rates

Looking at a much shorter-term…. Mortgage rates here in the US remain at very attractive levels despite an easing of geopolitical tensions between the US and Iran over the weekend.

Stocks and home loan rates

Corporate earnings season is upon us.  For the next couple weeks publicly traded companies will release their 4th quarter earnings reports.  

In aggregate, when earnings are stronger than expected it generally causes stocks to rise and hurts mortgage rates and vice versa.  

Jobs Week

Last week’s all-important jobs report came in slightly softer than expectations.  It showed 145,000 new jobs were created in December and the national unemployment rate of 3.5%.  All in all, the report signals continued strength in the economy.

However, looking back over the past few decades every recession has started while the unemployment rate is at cyclical lows.  

The week ahead

This week’s economic calendar is relatively light.  On Thursday we get retails sales and on Friday it will be housing starts and consumer sentiment.  

From a technical perspective mortgage rates are trading in a wide range.  I will be watching the stock market for direction.  If stocks rally then consumers should lock. If stocks trade sideways or decline then consumers can afford to float.

Current Outlook: neutral

Mortgage Rates Improve on Heightened Geopolitical Tension

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
Home Loan Rates

Mortgage rates are at the best levels in six weeks in response to a rise in geopolitical tensions between the US and Iran.

Geopolitical tension

Last week a top Iranian official was assassinated by a US airstrike.  Iran has characterized the attack as an act of terrorism and has vowed a retaliation.  I hope and pray that diplomatic efforts can ease the tension between the two countries.

However, the fear over a heightened conflict is causing uncertainty in the financial markets and encouraging investors to shift capital out of the stock market into safer havens such as US treasuries and mortgage-backed bonds.

A Flight to Safety

Should tensions continue to escalate then we may see US mortgage rates continue to decline as investors park their money in safer places.

Jobs Week

This week’s economic calendar is fairly light until we get to Friday when the all-important jobs report will be released.  Analysts are expecting 160,000 new jobs created for the month of December.  The previous month saw 266,000 new jobs.

Generally, when the employment report is stronger than expected it is bad for mortgage rates and vice versa.

Closer to home

Here in Oregon job growth in 2019 was slower than the previous six years.  The Bureau of Economic Analysis is predicting slow and steady growth for the next two years.

Outlook

From a technical perspective mortgage rates look like they have more to lose than to gain.  Therefore, I will recommend a locking bias.  However, should tensions between the US and Iran continue to escalate (and I hope they do not) then we should float.

Current Outlook: Locking bias

Home loan rates slightly worse on “phase one” trade deal

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
Home Loan Rates

Mortgage rates are mostly unchanged to slightly worse compared to last week.  The catalyst which pushed rates higher last week was an announcement pertaining to US-China trade relations.

Phase One

On Thursday, it was announced that the US and China had agreed to a “phase one” trade agreement.  On the announcement the US stock market rallied and mortgage rates increased.  However, after analysts had a chance to read the details of the agreement stocks and rates recovered slightly because the initial plan is less substantial than the markets had thought.

The Fed

Last week the Federal Reserve Open Market Committee met and elected to make no changes to short-term interest rates.  Although the Fed does not directly control mortgage rates their comments can, at times, impact their direction.

The markets currently are not expecting any cuts or hikes to the Federal Funds rate in 2020.

Home Construction

Data released earlier today shows strength for home building in 2020.  According to the Commerce Department housing starts were up 8.5% in October compared to a year earlier.  Furthermore, building permits hit the highest level in over 12 years.

More housing supply should help soften home price appreciation in the near-term.

The week ahead

This week’s economic calendar is relatively light.  I will be watching for existing home sales (Thursday), leading economic indicators (Thursday), and the Personal Consumption Expenditure Price Index (Friday).

From a technical perspective there is more room for mortgage rates to worsen than there is for them to improve.  I will maintain a locking bias this week.

Current Outlook: Locking bias

Mortgage rates improve on an escalation of trade tensions

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
Home Loan Rates

Mortgage rates are at the best levels in over a month today thanks to weakness in the US stock market.

Trade Tensions Escalate

Speaking at a NATO summit President Trump commented earlier today that a trade deal with China may not come until after the 2020 election.  Furthermore, he said he may use trade sanctions to punish countries who do not fund a fair share of NATO’s budget.

On the news US stocks declined.  The S&P 500, Nasdaq Composite, and Dow industrials were all down over 2% in midday trading.  Bad news for the stock market is good news for interest rates.

Jobs Report

This Friday we’ll get the latest monthly jobs report.  Analysts are currently expecting +189,000 new jobs to be reported.  A number south of that figure could help push rates back down to 2019 lows.

Locally, job growth in Oregon is slowing but as economist Josh Lehner points out this is mainly due to fewer job hirings, possibly because of tight labor market, rather than layoffs (which is a good thing).

The week ahead

Aside from the employment report the weekly economic calendar is relatively light.  Therefore, I expect mortgage rates to react to sentiment surrounding US-China trade talks and technical trading patterns.

From a technical perspective the yield on the US 10-year treasury note is currently trading at 1.711% which is below several layers of importance.  If yields can close below this level and follow through tomorrow then I expect rates to drift lower.

Current Outlook: floating

Mortgage rates improve as builders pick up pace

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More
Home Loan Rates

I recommended “floating” in last week’s ‘rate update’ and that paid off.  Mortgage rates are about .125% lower today than they were a week ago.

Trade Talks

Interest rates have improved because optimism surrounding US-China trade talks have subsided.  There have not been any new details regarding trade negotiations in the past week and therefore sentiment is turning more pessimistic which is helping US interest rates move modestly lower.

Home Construction

Earlier today the Commerce Department released the latest figures for housing starts and building permits.  The figures were stronger than expected and demonstrate that builders are continuing to break ground on new homes.

Ironically, here in the Pacific Northwest the level of residential construction remains historically low relative to in-migration numbers.  The result is that home prices and rents continue to rise.

The week ahead

Tomorrow we’ll get minutes from the last Fed meeting.  It is expected to show that Fed officials will be on hold from any further short-term interest rate adjustments (CLICK HERE to see why the Fed’s rate cuts don’t matter that much anyways).

On Thursday we’ll get existing home sales from the National Association of Realtors and on Friday we’ll get the latest reading on Consumer Sentiment.

From a technical perspective interest rates appear vulnerable to reverse course and move higher.  However, longer-term the stock market also appears over-bought.  If we see the US stock market pull back that would be very favorable for mortgage rates.

Current Outlook: locking bias

The Fed cuts and mortgage rates don’t budge. Explain that one….

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

It’s counter-intuitive that when a person blushes, presumably because they are embarrassed, we tend to like them more.

Do you know what else is counter-intuitive?

Home Loan Rates & The Fed

It can be confusing for consumers when the Fed cuts interest rates and mortgage rates go up.

Since July the Fed has made three rate cuts totaling -.75%.  However, consumers should know that the Federal Funds Rate, which is what the Fed controls, has a very obscure purpose (see HERE).

Mortgage rates today are effectively the same as they were when the Fed started this campaign.

Mortgage rate forecast

Nobody has a crystal ball but it’s worth noting that Fannie Mae released its latest forecast for housing and interest rates.  They are predicting that mortgage rates will average 3.5%-3.6% in 2020.  Their forecast includes interest rates with discount points but nevertheless they believe rates will be the same and moderately lower next year.

Trade Talks

Sentiment over US-China trade talks have played a significant role in the direction of the stock market and interest rates recently.  Over the past two weeks the financial markets have been optimistic that the US and China will iron out a new trade deal which has hurt mortgage rates and pushed stocks to all-time highs.

However, last week President Trump disputed progress so it’s tough to know what is going on behind the scenes.  The President is scheduled to speak in New York City today to a group of economists so any news could drive sentiment and influence the direction of mortgage rates.

The week ahead

This week’s economic calendar features the Consumer Price Index on Wednesday, the Producer Price Index on Thursday, and Retail Sales on Friday.  In addition there are Fed officials scheduled to speak through the week.

I recommended locking last week but am going to switch to floating.

Current Outlook: floating