Lower oil prices help home loan rates improve

A sincere THANK YOU to those who have served and continue to serve our country!

As an Oregonian I am proud that we are one of five states that honors our veterans by offering a subsidized home loan program which allows those who have served in the military to own a home with more attractive loan terms than a conventional loan.  Learn more about the ODVA loan program HERE.

Mortgage Rates

Although mortgage note rates are mainly unchanged from last week the underlying costs associated with each interest rate improved so overall rate sheets are more attractive for consumers to start this week.

Oil prices

Oil prices reached bear market territory last week meaning they are down 20%-25% off recent highs.  The  US, Russia, and Saudi Arabia have all recently boosted crude production which has increased supply while trade barriers have dampened demand.

Lower oil prices is good for mortgage rates because it is anti-inflationary.

The Fed

As expected the Fed did not hike short-term interest rates last week but hinted that they are likely to hike when they meet in mid-December.  That expectation is baked into the home loan rates available today.  As a reminder the Fed does not directly control mortgage rates but their comments can certainly influence them.

Mortgage delinquencies

Earlier today Corelogic released its monthly loan performance report.  It showed that mortgage delinquencies nationwide decreased to the lowest level in 12 years.  Only 4% of home loans are in some form of delinquency.  This is down from 4.6% a year ago.

Lower delinquencies could encourage lenders to ease credit requirements for loan approval.  This pressure coupled with a lack of enforcement from the Federal Government raises some concerns for me about irresponsible lending moving forward.

The Week Ahead

The economic calendar heats up starting on Wednesday when we’ll see the Consumer Price Index.  I will also be watching out for monthly Retail Sales due out Thursday and Industrial Production on Friday.

Current Outlook: floating