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

Mortgage Rate Update February 12, 2015

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

For the most part mortgage rates are more or less unchanged from Monday.

As we’ve said time and time again here on ‘rate update’ bad news for the economy tends to be good news for mortgage rates and vice versa.  Earlier today, the Commerce Department released figures which showed that retail sales here in the US declined by more than expected last month.  This flies in the face of conventional wisdom which suggests that lower gasoline prices should create additional discretionary income for US consumers.  The concern is that economic headwinds stemming from weakness overseas are penetrating our borders.

Mortgage rates tend to oscillate up and down in conjunction with the US 10-year treasury yield.  After hitting a multi-year low of 1.67% on February 2nd the yield has risen to ~2.00% and remained at that level for three days.  The 2.02% level is an extremely important level of technical resistance.

021215 10yr

I am hopeful that the US 10-year can hold the 2.02% level and close below that level today.  If so, I would expect mortgage rates to improve .125%-.25% over the next few days.  However, we have to be very careful because should yields push through the 2.02% level it would forecast continued increases in mortgage rates.

I will continue my floating position as long as the US 10-year trades at 2.02% or better.

Our office are closed on Monday on recognition of Presidents Day so the next ‘rate update’ will come out on Tuesday, February 17th.

Current Outlook: floating

Mortgage Rate Update February 9, 2015

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

Although mortgage note rates appear unchanged from last Thursday the accompanying closing costs are higher so in fact pricing has worsened.

In advance of last Friday’s all-important jobs report I issued my reasons for why I thought it made sense to lock.  I don’t always call the right shot but this time I did as pricing worsened for mortgage rates following the release of the report.  In case you missed it the report showed +257,000 new jobs created last month and revised higher previously released numbers for November and December.

jobs-report-2-6-15

This morning interest rates are slightly better off.  Over the weekend newly elected Greek Prime minister remained defiant against the European Union (EU) as he tries to renegotiate the Greek bailout package.  The fear is that these negotiations could spiral out of control and cause Greece to exit the EU in a disorderly fashion.  Uncertainty tends to help US interest rates.

The US economic calendar is fairly light this week with the highlights coming Thursday (retail sales) and Friday (consumer sentiment).

From a technical perspective interest rates are trading within a broad range of support and resistance.  This means we are more likely to see continued volatility this week.  For now we can float but we need to be prepared to lock in case rates move higher.

Current Outlook: floating

Mortgage Rate Update February 5, 2015

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

Mortgage rates are about .125% worse from where we started this week.

US interest rates have worsened slightly this week on easing concerns over Greece and the European Union.  This story is far from being “out of the woods” but currently sentiment is unfavorable for mortgage rates.

As I’ve explained before on ‘rate update’ mortgage rates tend to follow fluctuations in the yield on the US 10-year treasury note.  Currently the US 10-year treasury note is trading right at an important technical level at 1.78%.  Dating back 12 months the lowest yield on the 10-year treasury note was 1.673% (Feb. 2, 2015) and the high was 2.79% (April 3, 2014). The point here is that we have a lot more to lose than we have to gain moving forward.

0205-10yr 1yr

Tomorrow we get the all-important jobs report for January.  The markets currently expect 235,000 new jobs to have been created last month.  Generally a number higher than expectations will push rates higher and vice versa.

The jobs report is very difficult to predict and given that we have more upside risk than downside to gain I recommend locking in today.

 

Current Outlook: locking

Mortgage Rate Update February 2, 2015

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

Mortgage rates are unchanged from last week.

According to the Institute for Supply Management manufacturing activity slowed in January across the US.  In a separate report US consumer spending declined by more than analysts had expecting.  The reports are raising concerns about the economic impact of weakness around the globe.

It’s jobs week so I wouldn’t be surprised to see some volatility as the week progresses.  Currently, the markets are expecting 235,000 new jobs created for January.  As is usual, a number north of that would likely cause rates to worsen and vice versa.

221510yr1

From a technical perspective momentum remains on our side.  Since the end of December the yield on the US 10-year treasury note has improved by .50%.  Mortgage rates have followed suit.

Current Outlook: neutral

Mortgage Rate Update January 29, 2015

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

Mortgage rates have improved very modestly this week.

In yesterday’s Fed statement that was released following their regularly scheduled monetary policy meeting they signaled that they would not hike short-term interest rates sooner than mid-year.  They also did not commit to hiking rates at that time.

As we’ve pointed out on this blog the Fed is in a difficult position.  Although the US economy is chugging along at a healthy pace inflation remains low and international weakness poses a threat to our continued growth.  I do not believe the Fed will be able to raise short-term rates until Q1 2016 but we’ll have to wait and see just like Fed officials are.

Mortgage rates are back down the best levels of the year.  Could they continue to trend lower?  Absolutely but I don’t think it’s a bad time to lock in because I would not be surprised to see rates tick higher before they tick lower.

From a technical perspective mortgage-backed bonds are trading up against technical resistance so I will shift to a near-term locking bias.

Current Outlook: locking

FHA adjusts mortgage insurance again

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

Finally, some good news for FHA loan applicants.  Since January 2008 FHA steadily raised FHA Mortgage insurance premiums to help make up for steep losses incurred as a result of the housing bust.  Apparently the FHA mortgage insurance pool is back on healthier footing because as of yesterday FHA mortgage insurance premiums are actually declining!  HERE IS A LINK to the mortgagee letter announcing the reduction.  And here is a recent history of FHA Mortgage insurance premiums:

recent history FHA

Here is the chart showing updated FHA mortgage insurance premiums as of yesterday:

FHA chart1

 

Mortgage Rate Update January 26, 2015

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

Mortgage rates are unchanged from late last week.

Over the weekend the left-wing Syriza party was victorious in Greece’s national election.  The party ran on a platform opposing European Central Bank mandated reforms including austerity measures.  The election calls into question the long-term viability of Greece as an European Union (EU) member.  Should Greece secede from the EU it would set an unwelcome precedent for the remaining member states.

The financial markets will be focused on Greece over the next few months to see if they secede from the EU.
The financial markets will be focused on Greece over the next few months to see if they secede from the EU.

The bottom line is the election creates greater economic uncertainty which tends to benefit interest rates.  It also furthers the trend of money flowing out of Europe and into the US which will help keep our mortgage rates low.

The economic calendar is packed with significant data points this week.  Tomorrow the S&P Case-Shiller home price index will be released.  In addition, we have a Fed rate decision on Wednesday (short-term interest rates expected to be unchanged) and Q4 2014 GDP on Friday.

From a technical perspective the yield on the US 10-year treasury remains within a downward trend.  I will recommend a floating position as long as that pattern remains in place.

Current Outlook: Floating

Mortgage Rate Update January 22, 2015

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

Although mortgage note rates are unchanged from Tuesday the accompanying closing costs are slightly worse.

As I wrote earlier in the week (HERE) the European Central Bank (ECB) made an important announcement today outlining their plans to boost “quantitative easing” (QE) measures with the goal of stimulating their economy.  ECB President Mario Draghi unveiled a plan to purchase €60 billion per month in government bonds beginning in March and concluding in the fall of 2016.

Following the ECB's announcement earlier today the Euro is trading at an 11-year low and mortgage rates are more or less unchanged.
Following the ECB’s announcement earlier today the Euro is trading at an 11-year low and mortgage rates are more or less unchanged.

The financial markets were volatile this morning following the announcement partly because there were some details left out of the announcement.  What is unclear is how much the ECB is currently purchasing and how much the new plan will add to existing monetary stimulus.  Here in the US the stock market is trading higher and mortgage rates are priced modestly worst.

In housing news, the Federal Housing Finance Agency, overseers of Fannie Mae & Freddie Mac, released their monthly house price index earlier today.  It showed that home prices increased by 5.3% nationwide and 7.5% in the Pacific Region (includes Oregon).

Looking ahead there are some analysts calling for mortgage rates to move lower in February.  However, in the meantime I can see a case for rates to worsen from current levels.  If an applicant has time it’s probably worth it to float but if a customer is closing in the next two weeks I would recommend locking.

Current Outlook: locking for closings in the next 20 days, floating long-term.

Mortgage Rate Update Janaury 20, 2015

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

Mortgage rates worsened by ~.125% on Friday.  So far today mortgage-backed bond prices have stabilized.

As I’ve been writing on this forum interest rates are currently benefitting from lower oil prices (lower inflationary pressure) and weakness in Europe.

Oil prices continue to slide.  After the International Monetary Fund cuts its forecast for global growth on Monday oil prices have fallen another 4% in trading today.

The European Central Bank (ECB) is scheduled to meet this Thursday and the markets are expecting them to announce a program for “quantitative easing” with the goal of stimulating their economy.  Given that the markets are already expecting this the announcement won’t influence interest rates unless it is more extensive or less extensive than is expected.  If the ECB is more aggressive than analysts believe it will be then mortgage rates in the US should benefit and vice versa.

THURSDAY'S EUROPEAN CENTRAL BANK ANNOUNCEMENT WILL BE THE KEY DRIVER OF INTEREST RATES THIS WEEK.
THURSDAY’S EUROPEAN CENTRAL BANK ANNOUNCEMENT WILL BE THE KEY DRIVER OF INTEREST RATES THIS WEEK.

For borrowers who don’t want to gamble on this announcement it would make sense to lock in no later than Wednesday because by the time the financial markets open in the US on Thursday the announcement will already have been made.

Current Outlook: neutral

Mortgage Rate Update Janaury 15, 2015

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

Mortgage rates continue to improve.  We’re only about .25% off the all-time low levels reached in November of 2012.

Talk of the Swiss Franc is sweeping the financial markets today.  Earlier Swiss officials announced that they would let the Swiss currency float against the Euro (previously the two currencies were “pegged”).  Given that the EU is likely to engage in “quantitative easing” in the next year which tends to devalue a currency the Swiss Franc has appreciated by 30% in one day!  Investors continue to flee the Euro which is helping US interest rates.

A look at the chart of yields on the US 10-year treasury note shows just how significantly rates have dropped.  Since late December yields have fallen by almost .50%.  Mortgage rates closely follow the US 10-year treasury. yield.

US 10yr

Momentum appears to be on our side.  Given that we have seen such an acute move lower we have to be prepared for temporary reversals but I think applicants can continue to float.

Current Outlook: floating