Tag: Portland mortgage rate trends

US-China trade talks continue to influence mortgage rates

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

Happy Birthday to Ken Galbraith who would have turned 111 today.  The Canadian economist famously predicted in his 1958 book The Affluent Society that as society becomes more affluent private business would create additional consumer demand through marketing and consequently public goods (i.e. schools & parks) would be neglected.

Seems to me like he was on to something.

US-China Trade Talks

Trade negotiators from China and the US may be onto something too.

There are literally thousands of factors which can influence the direction of mortgage rates.  However, over the past few weeks one story line in particular has dominated.

Trade tensions between the US and China began flaring up in March of 2018.  Since then both sides have taken a tit for tat approach to trade policy.

Over the past few months trade negotiators from both countries have engaged in talks to try and resolve differences.   The financial markets have monitored the talks closely and sentiment has see-sawed accordingly.

When optimism rises that a trade deal will be reached mortgage rates worsen and when pessimism over a trade deal grows home loan rates tend to improve.

Following last weeks meeting between President Trump and China’s vice premier the financial markets are relatively optimistic that a trade agreement can be reached and therefore interest rates are currently cycling higher.

Will they continue to move higher?  Or will optimism wane and help rates cycle back lower?  Time will tell.

Brexit

Similarly, news out of Brussels is that UK and European leaders are close to reaching a draft Brexit deal which may allow the UK to separate from the EU in an orderly fashion.

Interest rates in Europe are increasing on optimism over an orderly exit.

The week ahead

Although I expect mortgage rates to react to sentiment over US-China trade talks there are a few other story lines I’ll be following.  Third quarter earnings reports have started.  As the stockmarket reacts to the reports I expect interest rates to react accordingly (click HERE to learn how the stock market can influence mortgage rates).

Furthermore, we’ll get the latest reads on retail sales (Wednesday), housing starts & building permits (Thursday), and industrial production (Thursday).

I think rates may worsen in the coming days but I do think they will reverse course at some point.  For those who can wait I would recommend floating.

Current Outlook: neutral

Global yields may help US mortgage rates improve

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

Global connectedness made a major advancement on this day in 1911 when the New York Times sent the first around the world telegram.

The telegram which simply read, “This message sent around the world” left the New York Times newsroom at 7pm and arrived back in 17 minutes after being relayed via San Francisco, the Philippines, Hong Kong, Saigon, Singapore, Bombay, Malta, Lisbon, and the Azores.  Read below to learn how global connectedness is influencing the direction of mortgage rates.

Mortgage rates sideways

After home loan rates improved by ~.25% at the beginning of August they have essentially flattened out for the past two weeks oscillating within a .125% range.

Mortgage rates improved at the tail end of last week but increased over this past weekend.

In the near term it seems like we may see more sideways movement.  However, the longer-term outlook still looks positive for borrowers.

International Pressure

Presently much of the developed world has interest rates which are lower than here in the US.  The Central Bank equivalent target interest rate is 0% or less in the Eurozone, Denmark, Switzerland, Sweden, and Japan.

There is currently $16.7 trillion in negatively yielding government bonds.

As a reminder, the Fed currently has the Fed Funds rate target at 5.25% and our 2-year through 30 year bonds are yielding between 2-3%.  Think that is high?  At least we’re not in Argentina where the central bank target rate is 58%!!!

Although US interest rates are not likely to go straight down I do think lower yields in other countries will put downward pressure on our interest rates in the months to come.  If a borrower can afford to be patient it probably makes sense to do so.

Jackson Hole

Speaking of central banks, global bankers are meeting this weekend in Jackson Hole, Wyoming for the annual economic symposium.  Fed Chairman Jerome Powell is scheduled to deliver a speech on Friday in which many analysts think he will indicate another Fed rate cut later this year.

Outlook

Mortgage rates may increase in the near-term is we see US stocks rally again.  However, my longer-term outlook remains unchanged.  For borrowers who remain patient in I think it makes sense to float.

Current Outlook: floating bias

Mortgage rates trend lower, how long will this last?

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

If you feel the urge today is National Dance Like a Chicken Day.  Not sure where they come up with these but if the Blazers can win tonight in game one of the Western Conference Finals I will be dancing like a mother clucker!

Mortgage Rates

Mortgage rates continue to benefit from the trade dispute that is ongoing between the US and China.

Last week US stock indexes lost 2%-3% as investors braced for the economic fallout.  When stocks do poorly it tends to help mortgage rates improve.

Stocks are rebounding today which is placing upward pressure on home loan rates.

Loan Performance

CoreLogic released its monthly Loan Performance Insights report for February.  It showed that the number of mortgages in delinquency fell in every category relative to last year and are at 20-year lows.

This may influence lenders to accept more risk in their loan portfolios which means it may become easier for borrowers to borrow money and buy houses.

Technical Guidance

Financial markets tend to work in cycles and home loan rates are no different.

From late March to mid-April interest rates worsened.  Since then home loan rates have been on a winning streak for roughly the same duration.  I am concerned we may see rates reverse and cycle higher.

The Week Ahead

Looking ahead this week we’ll get retail sales on Wednesday, housing starts/ permits on Thursday, and consumer sentiment on Friday.  There are also a series of Fed speakers on the docket.

Current Outlook: locking bias