Category: General Mortgage Info.

Mortgage Rate Update November 19, 2015

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

Mortgage rates are essentially unchanged from the beginning of the week.

Yesterday the minutes from the last Federal Reserve monetary policy meeting showed that the Fed does intend on raising short-term rates at the December 15th-16th meeting as the markets have been expecting.  That said, the Fed did leave themselves an out by stating that a very weak jobs report or an unexpected geopolitical event could alter the plan.

The markets have essentially already priced in a Fed rate hike in December so in and of itself that even should not change interest rates.  That said, their comments from now until then and other economic releases could influence rates.

There are no more economic data points set for release this week.  Therefore, we’d expect mortgage rates to react to technical trading patterns.  At this point mortgage-backed bonds and the yield on the US 10-year treasury note are trading in between a wide range and momentum appears to be favorable.  I will recommend floating into next week but given that trading desks on Wall Street will likely be vacated after Monday (holiday week) we could see some volatility.

Current Outlook: locking bias

Mortgage Rate Update November 16, 2015

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

Mortgage rates effectively moved sideways last week.  We have a very modest improvement this morning which may be short lived.

There are two events on the economic calendar that have me concerned this week.  Tomorrow we get the Consumer Price Index (CPI) from the Labor Department.  Consensus estimate for Core CPI (strips out volatile food + energy prices) is that year-over-year retail inflation will hit 2.00%.  The Core CPI has been at or below 2.00% since the summer of 2012.  Inflation is the primary driver of long-term interest rates, including mortgages.

Core CPI has been at or below 2% for over 2 years. (Source: Bureau of Labor Statistics)
Core CPI has been at or below 2% for over 2 years. (Source: Bureau of Labor Statistics)

Second, the minutes from the last Fed monetary policy meeting are scheduled to be released on Wednesday.  Recent releases have not been kind to mortgage rates so I think we have to assume this one could be trouble as well.

A look at the financial markets suggests that most investors think long-term interest rates will increase in the next year but not in a rapid fashion.  According to the Wall Street Journal investors have accumulated $16.4 billion in net short positions for the US 10-year treasury note, the highest level since May (these investments pay-off when rates rise).  In addition, US bond mutual funds saw $2.13 billion net cash outflow the largest withdrawal since May.

Given the aforementioned events I am going to recommend a locking stance.

Current Outlook: locking bias

Mortgage Rate Update November 12, 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 this week.

As I wrote on Monday I don’t believe it is any coincidence that markets presently believe the Fed is likely to raise short-term interest rates by .25% at the Dec. 15th-16th meeting and mortgage rates have increased by .25% over the past couple weeks.  Speaking of the Fed Janet Yellen is scheduled to speak later today and her comments can always impact the direction of rates.

The question I have is will rates continue to trend higher?  At the beginning of this week momentum in the interest rate markets led me to believe that it could very well be the case.  However, interest rates stabilized on Tuesday and the bond market was closed on Wednesday in recognition of Veteran’s Day.

Now that mortgage rates have increased by .25% in the past couple weeks will they continue to trend higher? or stabilize?
Now that mortgage rates have increased by .25% in the past couple weeks will they continue to trend higher? or stabilize?

At this point I don’t see a catalyst in the near-term that would cause mortgage rates to improve.  Sentiment has changed in the interest rate markets and is not favorable for rates moving lower at least in the near-term.

From a technical perspective mortgage rates would need to increase by another .125% to match 2015 highs. Whether or not this happens in the near-term may have to do with the yield on the US 10-year treasury note.  It is currently trading at an important technical layer @ 2.33%. A close above this level would  be a bad sign.

For now, I think the safe play is to take the long-term historical perspective and recognize on a historical scale rates below 4.5% are damn good.  I will maintain a locking bias but won;t be surprised if rates hang around these levels for a little while.

Current Outlook: locking bias

Mortgage Rate Update November 9, 2015

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

Pricing for mortgage rates continues to worsen.

In case you missed it Friday’s all-important jobs report came in stronger than expected.  The release showed that US employers added 271,000 new jobs during the month of October.  It also showed that average hourly earnings increased 2.5% from a year earlier.  As I have written about multiple times on ‘rate update’ wage growth has been all but absent during this economic expansion which is one reason why inflation has remained below the Fed’s target of 2%.  If wages continue to grow one would assume this would eventually create inflationary pressure which is bad for mortgage rates.

Employment-Monthly-11-9-2015

With a stronger than expected jobs report in hand the markets now are pricing in a 70% probability that the Fed will hike at the next monetary policy meeting slated for Dec. 15th-16th.

Unfortunately many consumers are not aware that the Fed does not directly control mortgage rates and therefore may think they have until December 16th to lock in “today’s low rates”.  However, longer term yields have already reacted.  Back on October 27th the yield on the US 10-year treasury note was ~2.05%.  As of this morning it is yielding ~2.35% (+.3%).  Mortgage rates have increased by ~.25% over this same time period.

Looking ahead for the remainder of the week the financial markets will be closed this Wednesday in honor of Veteran’s Day.  On Friday we’ll get a reading on the Producer Price Index and Retail Sales.

It’s been a difficult couple weeks for mortgage rates and momentum is still working against us.  I will maintain a locking bias.

Current Outlook: locking

Mortgage Rate Update November 5, 2015

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

Pricing for mortgage rates continue to worsen as the markets increasingly believe the Fed will raise short-term interest rates at the December meeting.  According to CME Group the markets currently believe there is a 56% chance the Fed will hike (last week it was 50%).

With all the focus on the Fed over the past few weeks the 3rd quarter earnings season has been largely ignored.  Despite the fact that yields have been inching higher the news out of the stock market is not great.  According to Bloomberg, with roughly 75% of the S&P 500 already reporting overall profits are down 3.1% which represents the biggest quarterly drop since the third quarter of 2009.  Bad news for stocks tends to be good news for mortgage rates.

close up of chalkboard with finance business graph
Stocks in the S&P 500 have seen profits decline but mortgage rates are trending higher.

Unfortunately, I don’t expect mortgage rates to react to the stock market anytime soon.  Tomorrow we get the all-important jobs report for October.  The last two releases have shown modest job growth (Aug. +136,000, Sept. +142,000).  Expectations are currently set at +181,000.  Given that recent jobless claims numbers have been relatively strong I wouldn’t be surprised if job growth exceed expectations which would not be good for mortgage rates.

Furthermore, the US unemployment rate was reported at 5.1% for September and is expected to come down to 5.0% in tomorrow’s report.  Should the unemployment rate dip even further to 4.9% then a December rate hike would likely become a certainty.

With momentum heading in the wrong direction technical trading patterns are also not on our side.  I am going to recommend locking in today.

Current Outlook: locking

Mortgage Rate Update November 2, 2015

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

Mortgage rates are more or less unchanged from last Thursday’s ‘rate update’.  As I wrote then mortgage rates have risen by ~.125% since the Fed’s monetary policy statement delivered on Wednesday of last week.  Investors now assign a 50% chance that the Fed will increase short-term interest rates at the December meeting.

11-2-CME

It’s hard to believe it’s November 2nd!  A new month means a new all-important jobs report which is slated for Friday.  Analysts will be watching this one closely as it may influence whether or not the Fed acts to hike rates in December.  I will lay out my strategy headed into this report in Thursday’s ‘rate update’.

From now until then there is a scattering of other economic data points but I expect mortgage rates to remain relatively flat until the end of the week.

From a technical perspective interest rates appear vulnerable.  The US 10-year treasury yield is trading right at an important technical level.  If yields close above this level it would be a bad sign for mortgage rates and if they can retreat below it would be a positive sign.

Current Outlook: neutral

Mortgage Rate Update October 29, 2015

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

Mortgage rates have worsened modestly following the release of the Fed’s monetary policy statement.

As was expected the Fed left short-term rates unchanged but their comments were unfriendly to mortgage rates.  Given the recent turmoil stemming from the Chinese economy many analysts had predicted that the Fed would wait until Q1 2016 to begin their rate hikes.  In fact, prior to the Fed’s announcement the markets had a assigned a ~33% chance for a rate hike in December.  Now the probability is ~50%.

10-29 -US 10yr

It will be interesting to see what happens from now until the next Fed meeting which is scheduled for mid-December.  By the time the Fed meets we will have received two more monthly jobs reports.  Assuming the November and December job reports are healthy it will become increasingly likely that the Fed will move to hike in December.  If not, then they will be forced to wait.

Speaking of jobs, this week’s jobless claims numbers were relatively strong.  This marks four straight weeks of healthy claims figures which you would think will translate into strong jobs reports.

For now, I will shift to a locking bias as the technical trading patterns do not look favorable for mortgage rates in the near-term.

Current Outlook: locking

Budgeting help

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

As a CERTIFIED FINANCIAL PLANNER(TM) and mortgage professional I have shared countless conversations with customers on the various challenges of setting up and maintaining a household budget/ spending plan.  I know that I personally use Quicken for my household but that program can be a little cumbersome for folks (it helps to have some level of accounting background if a person wants to use Quicken).

Savings, money, deposit.

That said, I was in a meeting today with some real estate professionals and they were raving about youneedabudget.com.   I went on the website and polked around and I love their mission and methodology.  Full disclosure: I have not used their free trial so I can’t say how easy or hard it might be to use but if you are a person looking for budgeting help this might be a tool to check out.  Good luck!

Mortgage Rate Update October 26, 2015

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

Mortgage rates remain unchanged.

Despite a rally in the stock market during the month of October mortgage rates have essentially remained flat.  The S&P 500 index hit a recent low of ~1,880 back on September 28th.  Since then the index has increased by 10%.  Normally we would expect mortgage rates to worsen when stocks strengthen but that has not been the case.

10-26-15 SP500

From a technical perspective US stocks look overbought which means we may see them reverse and move lower in the near-term.  That said, since mortgage rates didn’t worsen while stocks accelerated I don’t necessarily think they will improve if stocks do decline.

There’s a lot going on this week in the financial markets.  The Fed is scheduled to meet Tuesday-Wednesday.  It is not expected that the Fed will raise rates at this meeting but as always the wording in their monetary policy statement can always create volatility.

After a blockbuster report in August new home sales softened in September.  In other housing news the Case-Shiller Home Price Index is scheduled to be released on Tuesday and pending home sales on Thursday.

Lastly, we’ll get a look at personal income and the Personal Consumption Expenditure price index on Thursday.  We expect inflationary pressure to remain tame which is good for mortgage rates.

Current Outlook: floating

Mortgage Rate Update October 22, 2015

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

Mortgage rates are unchanged for the week.

Although there are a lot of story-lines buzzing around nothing seems to be making a meaningful impact in the interest rate markets.

Earlier today European Central Bank (ECB) President Mario Draghi made comments which are leading the markets to believe that the ECB may engage in further monetary stimulus.  The news is helping lift stock markets both here and across the Atlantic.

Existing Home Sales were strong across the US in September.
Existing Home Sales were strong across the US in September.

According to the National Association of Realtors existing home sales rose in September by a sharper than anticipated clip.  The report showed that on an annualized basis the US saw 5.55 million homes sale in September.  Tight supply continues to support prices across the country.  Median home prices in the western region of the report increased by 8.0% on a year-over-year basis.

From a technical perspective interest rates maintain at the best levels of the year.  I will maintain a locking bias.

Current Outlook: locking