Category: Swanson Home Loans Blog – Mortgage Rate Updates and More

Mortgage Rate Update March 16, 2015

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

Mortgage rates are unchanged from the end of last week.

The main focus this week is on the Fed.  They begin a regularly scheduled two-day monetary policy meeting tomorrow and will deliver a policy statement on Wednesday.  The financial markets are anxious to hear if the Fed repeats the word “patient” in the statement.  There is speculation they may remove the word which would signal that the Fed intends on raising short-term interest rates in the next couple months.  If the Fed keeps “patient” in the statement it would signal that the Fed plans on keeping short-term rates near zero for an extended period of time.

It all boils down to one word this week.
It all boils down to one word this week.

There are a couple other data points on the calendar this week but the Fed’s policy statement will garner the most attention.

From a technical standpoint mortgage-backed bonds are battling overhead resistance and therefore may have a tough time moving any lower.

No matter the outcome of the Fed policy statement I am concerned rates may react higher.  I would expect stocks to rally in the event that the Fed leaves “patient” in the statement.  When stocks rally interest rates often suffer.  If the Fed removes “patient” from the statement then it would signal short-term rates are heading higher.  Therefore, I would recommend locking today or tomorrow.

Current Outlook: locking before Wednesday’s Fed statement

Mortgage Rate Update March 12, 2015

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

Mortgage rates are lower than where we started the week.  The shift to floating on Monday proved to be the correct call.

The impact of last week’s stronger than expected jobs report was short lived.  After rates rose ~.125% on Friday last week they have calmed back down to the levels available one week ago today.

The Commerce Department reported weaker than expected retail sales numbers earlier today.  Despite low gasoline prices and a strengthening jobs market consumers remain cautious (and snowed in their homes) when it comes to consumption.

Winter weather out east is being blamed for weaker than expected retail sales figures.
Winter weather out east is being blamed for weaker than expected retail sales figures.

Back on February 26th I posted THIS PIECE which highlighted the stock market rally and cautioned that equities may be ripe for reversal.  From that date to yesterday’s close the S&P 500 index had fallen by ~3.3%.  So far today US stocks are trying to rally which may hurt mortgage rates.  I still get the feeling that stocks may be headed lower.

From a technical perspective mortgage rates are trending lower and momentum is on our side.  I will maintain a floating bias.

Current Outlook: floating

Mortgage Rate Update March 9, 2015

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

Mortgage rates worsened by ~.125% across the board on Friday following the release of a better than expected jobs report (CLICK HERE to understand why).

In case you missed it the employment report showed 295,000 new jobs were created during the month of February and the unemployment rate ticked lower to 5.5%.  The report shows continued strength in the labor market and puts additional pressure on the Fed to consider hiking short-term rates later this year.  I still believe that lower oil prices will eventually curb employment growth but for now the economy keeps churning.

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This week’s economic calendar is fairly light with the highlights coming Thursday (Retail Sales) and Friday (Producer Price Index & consumer sentiment).

From a technical perspective it appears that the damage has been done in the near term.  Yields are trying to improve after spiking Friday so we’ll float today to see if we can see things reverse.

Current Outlook: floating

Mortgage Rates are headed higher today

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

In response to this morning’s stronger than expected jobs report interest rates here in the US are headed higher.  The yield on the US 10-year treasury note, which mortgage rates loosely follow, are currently .15% higher on the day.  Mortgage rates opened up .125% worse to start the day and we may end up .25% worse before its all over.

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Mortgage Rate Update March 5, 2015

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

Mortgage note rates are essentially unchanged from Monday but the accompany closing costs are modestly worse.

Tomorrow we get the all-important jobs report for the month of February.  The markets are currently expecting 230,000 new jobs created and an unemployment rate of 5.6%.  A number north of 230,000 would likely pressure mortgage rates higher and vice versa.

This morning’s jobless claims number may offer a clue as to what will transpire tomorrow.  The release showed that 320,000 new cases of unemployment benefits were requested last week.  This was higher than expected and the highest level in almost a year.

claims-3-5-152C822E664E29

I have written about the possible ill effects of lower oil prices a couple times on this blog.  Here in Portland, OR where I reside lower gas prices are an effective tax cut which should help stimulate the local economy.  However, for states such as Texas, Louisiana, Oklahoma, and North Dakota, who have been the economic engines of our economic recovery, lower prices mean fewer oil production projects are financially feasible.  The question is at what point do we start seeing fewer jobs created in those regions and what is the multiplier effect?

I switched to a locking bias on Monday which proved to be a good call.  For newer applications I am going to recommend floating into tomorrow’s jobs report with the expectation that results may be worse than expected.  This is always a big risk so if you don’t have the stomach for volatility go ahead and lock.

Current Outlook: floating

Mortgage Rate Update March 2, 2015

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

Mortgage rates are essentially unchanged from last Thursday.

Thank goodness February is over.  It was a tough month for mortgage rates as they increased by ~.25% across the board.  Will March be better?  So far no good.

US stocks are starting the new month higher.  The NASDAQ briefly traded at 5,000 earlier today.  The all-time high for the technology focused composite is 5,032 set in March of 2000.  Good news for stocks is often bad news for interest rates.

Calculator with NASDAQ on display on white background

It’s a busy week for economic news.  Earlier today the Fed’s favorite gauge of inflation was released.  The Personal Consumption Expenditure price index showed that inflationary pressure in the US economy remains low.  This is good news for mortgage rates and gives the Fed more time before they start boosting short-term rates.

This week is jobs week and Friday’s all-important employment report is likely to have a significant impact on the direction of interest rates.  Currently expectations are for ~225,000 new jobs.

From a technical perspective the US 10-year treasury is trading back above 2.02% which is not great for mortgage rates.  We shifted to a near-term locking bias last Thursday and will remain in locking mode for now.

Current Outlook: locking

Mortgage Rate Update February 26, 2015

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

Although mortgage note rates are unchanged from Monday the accompany closing costs are slightly lower so in fact the rate environment has improved modestly this week.

More and more analysts are calling for a stock market correction.  The S&P 500 is up almost 6% during the month of February.  It’s one of the largest one month climbs in stock market history.  Should stocks reverse and move lower it would likely help interest rates improve.

02-26sp500

Fed Chairwoman Janet Yellen testified to lawmakers back in Washington DC the past two days.  Her comments were in line with what the Fed has been signaling through their post monetary policy meetings.  In effect, the Fed stands ready to raise short term interest rates but the economy still has some room for improvement.  Furthermore, inflation remains very low.

Speaking of inflation deflation, this morning’s Consumer Price Index (CPI) report showed that prices at the retail level of the US economy fell by .1% on a year-over-year basis.  This is not a huge surprise given that oil prices have fallen so dramatically over the past few months.  When you strip out food and energy prices rose by 1.6%.  Inflation is the primary driver of interest rates so as long as inflationary pressure remains weak rates should remain relatively low.

From a technical perspective mortgage-backed bonds are trading near technical support and the US 10-year treasury yield is trading up against it’s 50-day moving average.  Should those technical levels hold it would likely push rates modestly higher in the near term.

For transactions that need to lock in the next week or two it would probably make sense to protect the current level of rates.  For longer-term closings it may make sense to float and wait to see if the stock market moves lower.

Current Outlook: near-term locking bias, longer term float

Mortgage Rate Update February 23, 2015

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

Mortgage rates are unchanged from last week.

This week is shaping up to be a very busy one with a multitude of significant economic data points.

Earlier today the National Association of Realtors released its latest reading on existing home sales.  The number of sales fell but not due to a lack of demand.  As many home shoppers know all too well tight inventories are causing fewer transactions to go into contract.  Nationwide, the median home price rose by 6.2% on a year-over-year basis.

Tomorrow, Standard & Poors will release the latest reading of the Case-Shiller Home Price Index.  On Wednesday we get a look at new home sales.  On Thursday durable goods and consumer price index are released.  And on Friday we get the latest reading on Gross Domestic Product and pending home sales.

WE WILL LEARN A LOT ABOUT THE HOUSING MARKET THIS WEEK.
WE WILL LEARN A LOT ABOUT THE HOUSING MARKET THIS WEEK.

Suffice is to say we should learn a lot about the current state of the US economy and housing market this week.  With oil prices continuing to hover around $50/ barrell I maintain concerns that economic output and job growth may begin to slow which would likely hurt stocks and benefit interest rates.

From a technical perspective interest rates are trading in the middle of support and resistance and I will maintain a floating bias.

Current Outlook: floating

Mortgage Rate Update February 19, 2015

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

Mortgage rates are unchanged from the beginning of the week.

Yesterday the minutes from the most recent Fed meeting were released.  As I have previously written about here on ‘rate update’ the minutes indicated that the Fed is concerned about raising short-term interest rates too soon and will likely have to delay monetary tightening.  Prior to the release many believed the Fed would begin to tighten in mid-2015 but given that inflation remains low and the US economy faces headwinds in the form of low oil prices (which will likely impact future job growth) we thought the Fed would have to wait until early 2016.

Greek officials continue to negotiate with the European Union over a bailout extension.  Time is running out for Greece but the financial markets still believe a last minute deal will be reached.  It is very possible a deal is reached in the next few days which could influence mortgage rates although until the details are known it is difficult to know how.

Are US stocks due for a correction? If so, mortgage rates would likely benefit.
Are US stocks due for a correction? If so, mortgage rates would likely benefit.

Is the US stock market overvalued?  The S&P 500 is up almost 5% since the beginning of February and up almost 140% since the 2009 lows.  Many market analysts are beginning to call a correction.  If stocks do retreat in the coming weeks/ months that would typically bode well for mortgage rates as investors would likely reinvest their capital in the bond market.

The technical picture looks favorable for interest rates so I will recommend floating for now.

Current Outlook: floating

Mortgage Rate Update February 17, 2015

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

Although mortgage note rates are mostly unchanged this morning the accompanying closing costs are slightly worse.

Last Thursday I highlighted the importance of the US 10-year treasury sticking at or below the important technical level of 2.02%.  Unfortunately the yield on the 10-year has pierced above that layer and is currently trading at 2.09%.  Should we close above 2.02% I would expect the yield to rise as high as 2.17%-2.22% before having an opportunity to improve.  This means mortgage rates may get .125%-.25% worse before they get better.

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However, should yields reverse and close at or below 2.02% this would be a great sign for mortgage rates.

Over the weekend talks broke down between Greece and the European Union (EU).  Greece is in need of an extension to their bailout package and EU leaders insist on enforcing austerity measures and economic reforms while Greece is hopeful to renegotiate the terms.  The markets appear to have confidence that some agreement will obtained possibly at the last minute.  Should sentiment change we’d expect that to benefit mortgage rates.

The economic calendar gets busy tomorrow with readings on housing starts, building permits, Fed meeting minutes, and inflation at the wholesale level of the economy.  US economic data has weakened modestly over the past week but mortgage rates have not reacted as we would expect.

For those who have the stomach of volatility I would recommend floating to see if the US 10-year can float back down towards 2.02% by the end of the day.  If so, continue to float.  If not, time to lock.

Current Outlook: floating