Mortgage rates continue to move lower

Give a man a fish and he eats for a day.  Teach a man to fish and he will neglect his job and family thereafter.”- anonymous

Today is National Go Fishing Day!  As anglers take to the waterways mortgage rates are sinking!

Mortgage Rates

Mortgage rates continue to trend lower prompting many homeowners to evaluate their refinance options.  The Mortgage Bankers Association reported that refinance applications jumped 47% last week compared to the prior week.

European Interest Rates

Yields in the US are following European interest rates lower.  Concerned with declining economic growth European Central Bank President Mario Draghi stated earlier today that he is prepared to cut short-term interest rates and accelerate bond-buying programs with the hopes of driving interest rates down.

The yield on a German 10-year bund is currently negative .30%.  Comparatively the yield on a US 10-year treasury note is trading at ~+2.06%.

The Fed

The US central bank begins their regularly scheduled two-day monetary policy meeting today.  Tomorrow they will announce any changes to US short-term interest rates.  I don’t expect they will cut rates tomorrow but their comments could help mortgage rates improve further.

The Week Ahead

The weekly economic calendar is relatively light.  The highlights include the aforementioned Fed announcement (Wednesday) and Existing Home Sales (Friday).

Momentum is on our side which is why I shifted to a floating bias last week.  I will maintain that position.

Current Outlook: floating bias

Home loan rates remain low as payment performance improves

On this day in 1950, Ben Hogan bested two other golfers in an 18-hole play-off to win the US Open.  The remarkable aspect of the win was only 16 months earlier Hogan was involved in a near fatal car crash that left him unable to walk for months.  Doctors predicted he may never golf again.

The win was Hogan’s third major championship.  Where did Hogan win his first major championship?  Right here in Oregon at the Portland Golf Club!

Mortgage Rates

Home Loan rates have increased very modestly in the past week as trade tensions have eased and US stocks have rallied.  If stock finish in positive in positive territory today it will mark the 7th straight day of gains.

Home Loan Performance

Corelogic released its monthly Loan Performance Insights report earlier and it showed that only 4% of all mortgages in the United States are 30 days or more delinquent.  This is down from 4.3% a year earlier and is near historic lows.

Mortgage loan portfolios are performing extremely well which means credit standards should remain accommodating in the near future.

Home Equity

Contributing to strong loan performance is the fact that most homeowners have a significant amount of equity built up in their homes.  According to the most recent Corelogic Homeowners Equity Insights report the average homeowner has seen a +5.7% increase to their home equity since last year.  

Here in Oregon the average homeowner gained ~$7,000 in equity which is why homeownership is still one of the best ways to build long-term financial wealth.

The Week Ahead

Last week’s all-important jobs report disappointed the markets showing only 75,000 new jobs created during May.  

This week the economic calendar holds significant data released on Wednesday (Consumer Price Index), Thursday (Import/ Export prices), and Friday (Retail Sales & Consumer Sentiment).  

Momentum remains on our side so I will shift to a floating bias.

Current Outlook: floating bias

Mortgage Rates hit 18 month lows! Is a Fed rate cut next?

Today is National Cheese Day which is causing me to face my cheddar cheese addiction.  Luckily it’s only mild….

Cheese connoisseur’s in China will have to pay a little extra for US cheese thanks to recently imposed tariffs.  Will Mexico be next?  Trade tensions are the primary reason why mortgage rates are at the best levels since January of 2018.

Mortgage Rates

Home loan rates have improved substantially over the past couple weeks thanks to weakness in the stock market.  Investors have been selling stocks in favor of “safer” assets as trade tensions rise between the US and China and now Mexico.

President Trump has stated that if Mexico does not take measures to reduce the flow of migrants crossing the US border then he will impose trade tariffs which will gradually increase starting on June 10th.

The Fed

Investors are not the only people tracking trade tensions.  Fed Chairman Jerome Powell announced earlier today that Fed policymakers are monitoring trade tensions closely and might be willing to cut short-term interest rates later this year if the economy demonstrates weakness.

Home Prices

CoreLogic’s Home Price Index report showed that homes across the country increased by 3.6% over the past year.  They forecast that home prices will increase by 4.7% over the next 12 months.

The Week Ahead

This week’s economic calendar is headlined by Friday’s all-important jobs report.  Analysts are expecting +185,000 new jobs created in May.  A number north of that figure could pressure mortgage rates higher and vice versa.

Current Outlook: locking bias

Existing Home Sales a mixed bag, mortgage rates slightly worse to start the week

Owning your home is still one of the best ways to achieve wealth and as Plato once said “Wealth is known to be a great comforter.”  Happy Birthday to Plato who would have turned 1,592 years old today and he lived forever.

Mortgage Rates

We shifted to a locking bias last week and that proved to be the correct call.  Although mortgage note rates are mostly unchanged the pricing has worsened meaning the accompanying closing costs are modestly worse.

Home Sales

Earlier today the National Association of Realtors released the monthly existing home sales report.  It showed that the number of homes sold during April actually contracted by nationwide.  However, on the west coast the number of existing home sales actually accelerated by 1.8% from March.

Coincidentally, the average number of days on market contracted from 36 days down to 24.  There is no question that the housing market is less frantic than it was a couple years ago but demand remains strong.

The Week Ahead

This week’s economic calendar is relatively light.  On Wednesday we’ll get the minutes from the most recent Federal Reserve monetary policy meeting but no fireworks are expected.  On Thursday we’ll see numbers for new home sales.

Stock Market

In the absence of significant economic data I expect mortgage rates to take direction from the stock market.  If stocks rally then I expect home loan rates to worsen and vice versa.

Investors remain concerned over US-China trade talks and the ongoing Brexit saga.  Any signals that either of these story lines will resolve themselves sooner rather than later would be bad for mortgage rates.

Current Outlook: neutral

 

Mortgage rates improve on heightened trade tensions

A HUGE THANK YOU to all the teachers and educators who work hard to support our children in their growth and development.  Today is National Teacher Appreciation Day.

I’d like to thank Professor Randy Grant of Linfield College who helped me find a passion for economics and finance.  Thank you Randy!  You are an excellent person and educator.

Mortgage Rates

Mortgage rates have improved modestly in the last couple days thanks to uncertainty around a new trade deal with China.

Over the weekend US trade officials threatened China with additional trade tariffs if an agreement was not reached soon.  In reaction to heightened trade tensions US stocks have declined yesterday and today which has helped home loan rates improve.

Home Price Appreciation

Earlier today CoreLogic released its Home Price Index report for March.  It showed that national home prices increased by 3.7% from last year.  It also forecasted that home price appreciation would accelerate to +4.8% in the next year.

Demand for housing

Zillow released THIS POST yesterday which highlights the demographics of the US and how it is supportive of demand for housing.  According to the article an additional 3.11 million people which reach “prime first-time home-buying age” (34 years old) over the next eight years.  Portland’s age demographics mirror this forecast.

The Week Ahead

The economic calendar is light this week.  There are a handful of Fed officials with scheduled speeches including Chairman Powell who will speak on Thursday.  On Friday the Labor Department will release the latest reading of the Consumer Price Index.

Current Outlook: locking bias

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

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

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