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

Mortgage Rate Update January 12, 2015

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

Mortgage rates remain at fresh lows and at the best levels in almost 2 years.

This morning oil prices continue to trend lower.  An oil analyst with Goldman Sachs came out this morning with a revised forecast calling for prices to fall all the way to $42/ barrel.  Keep in mind that oil was trading over $100/ barrel as recently as August of last year.

Lower oil prices will be an interesting topic for the stock market over the next couple weeks.  Today marks the first day of ‘earnings season’ when US corporations report their quarterly results for Q4 2014.  One would expect lower oil/ gas prices to be a boon for retailers (i.e. Walmart, Costco, etc.) and a problem for oil producers.  Given that the oil industry has created much of the economic growth in our economy over the previous 5 years it will be interesting to see the net effect of lower prices at the pump.  Remember, bad news for the stock market is often good news for mortgage rates and vice versa.

The net impact of lower oil prices on the stock market is difficult to predict. Yet, the direction of stocks will play a role in the direction of mortgage rates moving forward.
The net impact of lower oil prices on the stock market is difficult to predict. Yet, the direction of stocks will play a role in the direction of mortgage rates moving forward.

The economic calendar is quiet until Wednesday and then we get a steady stream of significant data including retail sales (Wednesday), Producer Price Index (Thursday), and Consumer Price Index (Friday).

For now we’ll keep a floating position since momentum is on our side.

Current Outlook: floating

Mortgage Rate Update January 8, 2015

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

Mortgage rates are essentially unchanged from Monday and remain near all-time low levels.

US stocks are trading sharply higher this morning as oil prices stabilize.  In the past month oil prices have declined by ~50%.  Traditionally this has been seen as good news for the US economy because it allows households to spend less on gas and more in other sectors.  However, the US economy is also tied to oil production thanks to the rapid technological gains in fracking.  Therefore, lower oil prices also represents a threat to our nation’s economic health.  The stock rally has caused mortgage rates to worsen moderately but rates are not going to make a decisive move with tomorrow’s all-important jobs report looming.

Tomorrow the Bureau of Labor Statistics will release the monthly jobs report.  Expectations are that ~235,000 new jobs were created in December.  We normally don’t track the unemployment rate on this blog but we’ll need to start paying attention there.  The Fed defines “full employment” when the unemployment rate reaches 5.5%.  The unemployment rate is currently 5.8%.  Should it continue to trend lower it could force the Fed’s hand in raising short-term rates.

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The monthly jobs report is always hard to forecast.  Mortgage rates are currently ~.25% lower than they were 3 weeks ago so I will recommend a locking bias.

Current Outlook: locking

Mortgage Rate Update January 5, 2015

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

Happy New Year!  I sincerely wish you a successful and happy 2015!

Mortgage rates are starting the new year off with a slight decline.  30-year fixed mortgage rates are currently at the best levels since May of 2013.  What is pressuring rates lower?

Two main themes are helping mortgage rates.  First, weakness is Europe continues to plague their economies.  Stock indexes in England, France, and Germany are all off 2.00%-3.45% today.  It is increasingly evident that the European Central Bank will need to engage in additional monetary stimulus to prop up economic activity on the continent.

When this happens the Euro will likely continue to weaken against the dollar.  Therefore, many European investors are investing in US-dollar denominated assets, including mortgage-backed bonds, which is pressuring yields lower in the US.

LOWER OIL PRICES ARE HELPING MORTGAGE RATES MOVE LOWER.
LOWER OIL PRICES ARE HELPING MORTGAGE RATES MOVE LOWER.

Second, oil prices continue to fall.  In fact, Brent crude oil is trading 6.24% lower today.  Lower oil prices will soften inflationary pressure and allow the Fed to keep short-term interest rates lower for a longer period of time.  Furthermore, because the US is now a major producer of oil lower prices will also have a negative impact on our national economy.  Bad news for the economy is good news for interest rates.

I see these two trends continuing and therefore would not be surprised to see rates improve another .125%-.25%.  I recommend floating.

Current Outlook: floating

Mortgage Rate Update December 22, 2014

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

Housekeeping: Happy Holidays!  This will be the last ‘rate update’ of 2014.  I will back on Monday, January 5th.  Have a safe and joyful season!

This is a holiday shortened week with the markets open only a partial day on Wednesday and closed entirely for the Christmas holiday.  The markets will be back open on Friday.

 

HAPPY HOLIDAYS! 'RATE UPDATE' WILL BE BACK ON JANUARY 5TH.
HAPPY HOLIDAYS! ‘RATE UPDATE’ WILL BE BACK ON JANUARY 5TH.

Mortgage rates are effectively flat from the latter half of last week.  US stocks had huge gains on Thursday and Friday last week.  Despite the rally mortgage rates managed to trade sideways.

According to the National Association of Realtors existing home sales slowed in November but the headline decline is misleading because they also revised higher the previously released October figure.  Year-over-year the median home price nationwide rose by 5.0%.

Significant economic data is scheduled for tomorrow and Wednesday and with the fewer traders at their desks this week we could see some volatility.  In addition, the US Treasury is set to auction $104 billion in new debt.

From a technical perspective mortgage rates are entering a tight trading range in between the 25-day moving average and overhead resistance.  I am going to recommend a locking approach mainly because we have more to lose than to gain.

Current Outlook: locking

Mortgage Rate Update December 18, 2014

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

Mortgage rates are slightly higher than when we started the week but still within .125% of 2014 lows.  Fortunately we took a locking stance on Monday so existing applications should be protected from this small increase.

In yesterday’s monetary policy statement the Fed removed their reference of leaving short-term interest rates low for a “considerable time” and instead said they planned on being “patient” in raising rates.  This morning commentators are interpreting that statement to mean that the Fed may start raising rates in the next 2-3 meetings which would put us inside four months.

The Fed plans to be "patient" in raising short-term rates.
The Fed plans to be “patient” in raising short-term rates.

However, with oil prices being at multi-year lows and the potential negative economic impacts associated with that I happen to believe the Fed will not be able to raise rates until the late part of 215 or even into 2016.

The economic calendar has run its course this week so we won’t receive any new data until next week, which of course is holiday shortened.

From a technical perspective it looks like the US 10-year treasury note may bounce lower off the 2.20% level and head back down near 2.00%.  If this happens I’d expect fixed rates to improve by .125%.  However, if stocks continue to rally then the yield may break above 2.20% which would be a bad sign for mortgages.

Current Outlook: floating

Mortgage Rate Update December 15, 2014

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

Mortgage rates are back at the best levels of the year.

This week is shaping up to be “the storm before the calm” as we are facing a busy economic calendar along with a return of volatility in the financial markets.  And of course next week brings the Christmas Holiday when we don’t expect too much activity.

The yield on the US 10-year treasury note, which mortgage rates loosely follow is back down near 2.11%.  We started 2014 off at 3.00%.  Over that time mortgage rates have improved by approximately .625%.

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Over the next 2 days there is a grouping of significant economic data that will be released.  On Wednesday the Fed will conclude its regularly scheduled monetary policy meeting and deliver it’s post meeting statement. The Fed’s comments can always sway the markets.

From a technical perspective both stocks and mortgage-backed bonds are trading in a tight range.  I will shift to a locking position since mortgage rates are presently at 2014 lows.

Current Outlook: locking

Mortgage Rate Update December 11, 2014

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

Mortgage rates have improved modestly over the past couple days and are back down at the best levels of the year.

US stocks got hammered yesterday as the market grew concerned about the falling price of oil.  Normally one would think lower gasoline prices would be god for the economy because it leaves more money in the household budget for other consumption.  However, now that the US is so heavily invested in domestic production lower prices means lower profits for many US companies.  When stocks do poorly mortgage rates often benefit.

Retail Sales were up last month which may pressure mortgage rates higher.
Retail Sales were up last month which may pressure mortgage rates higher.

As we’ve seen in the past the stock market often has a short memory.  After posting the biggest one-day loss in over 2 months yesterday US stocks are rallying today on stronger than expected retail sales figures.  The Commerce Department reported earlier today that sales at the retail level increased by .5% last month when you strip out cars.  This was higher than economists had been expecting.

From a technical perspective mortgage-backed bonds appear vulnerable.  I am going to shift to a locking position.

Current Outlook: locking

Mortgage Rate Update December 8, 2014

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

Mortgage rates are modestly worse following Friday’s better than expected jobs report.

In case you missed it the all-important jobs report released last week showed that the US economy added 321,000 new jobs in November.  This is the strongest reading of the year and well above expectations.  Good news for the economy is often a bad sign for mortgage rates.

Fortunately things did not get out of hand on Friday despite the strong reading and today mortgage rates are trying to reverse lower thanks to weakness in the stock market.  US stocks are trading lower on weak economic data out of Germany and Japan.

Looking ahead this week the economic calendar is fairly light.  Therefore, we expect interest rates to take direction from the stock market as well as technical trading patterns.

After rallying by over 10% from late October to late November the US stock market has been stagnant for the past week and a half.  Many analysts still believe the stock market is overdue for a correction.  If and when that takes place mortgage rates should benefit.

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However, the yield on the US 10-year treasury note is currently trading up against overhead technical resistance at 2.30%.  If the yield on the 10-year breaks above this level I would expect mortgage rates to increase by ~.125%.

For now I will remain in a floating position but may have to shift that prior to the next ‘rate update’ posting if the markets begin to move in the wrong direction.

Current Outlook: cautiously floating

Mortgage Rate Update December 4, 2014

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

Mortgage rates are priced modestly worse than they were on Monday but for the most part rates are basically unchanged.  Rates have basically traded sideways this week in anticipation of tomorrow’s all-important jobs report.

Current expectations call for ~230,000 new jobs to be announced in the report.  A number that comes in at 230,000 or higher will likely pressure mortgage rates higher and vice versa.  This report is very hard to predict.

Tomorrow's jobs report will likely drive rates up or down heading into next week.
Tomorrow’s jobs report will likely drive rates up or down heading into next week.

In other news, the European Central Bank, Europe’s equivalent of the Federal Reserve, announced earlier this morning that they would not add any additional monetary stimulus at this time.  Instead, they will reassess the need for stimulus in early 2015.  Stocks turned negative on the news which bodes well for mortgage rates in the near term.

From a technical perspective mortgage-backed bonds are trading above a couple layers of support so even if tomorrow’s jobs report we’re strong we may catch a break.  I am going to recommend cautiously floating BUT I want to emphasize that this is a risk.

Current Outlook: cautiously floating

Mortgage Rate Update December 1, 2014

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

Since I shifted our outlook to ‘floating’ back on November 13th mortgage rates have improved by .125%-.25% and are currently at the best levels of the year.  Looking back the pattern of watching mortgage rates decline in the 2nd half of the year is very consistent in recent history.  In fact, since 2006 mortgage rates have declined at some point during the 4th quarter each and every year.

12114 fixed rate

In case you haven’t noticed oil prices are currently at 5-year lows.  This bodes well for interest rates because energy is a major driver of inflation in our economy.  So long as oil prices are low it should ease inflationary pressure which is a primary driver of mortgage rates.

Looking ahead the economic calendar is fairly light this week until we get to Friday when the all-important jobs report is due.  We’ll talk strategy for that report on Thursday.  For now, we can continue to float.

Current Outlook: floating