Tag: home loan rates

Higher oil prices threaten mortgage rates

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

President Woodrow Wilson proclaimed the first Mother’s Day holiday this week in 1914.  For the past 104 years we have celebrated those special women in our society who desperately need a break yet do not want to miss a single minute.  Thank you moms!

Mortgage Rates  

Interest rates improved modestly last week but not enough to get excited about.  For most applicants their note rate is unchanged but the accompanying closing costs are lower.

Oil prices

Oil prices have been on the rise which does not bode well for mortgage rates.  In the past month they have increased by 10% reaching the highest levels since 2014.  

When oil prices rise it tends to cause inflationary pressure in the economy.  Inflation is the primary driver of long-term interest rates.  

The Week Ahead

Speaking of inflation we’ll get the latest reading on the Producer Price Index this Wednesday and the Consumer Price Index on Thursday.  If those reports come in hotter than expected I would expect rates to worsen.

Also on Wednesday the US Treasury is scheduled to auction $25 billion of 10-year treasury notes.  The added supply could make it hard for mortgage rates to improve for the second week in a row.  

From a technical perspective the yield on the US 10-year treasury note is currently at ~2.95%.  Fortunately the 3.00% level has acted as resistance so if we test that level again I am hopeful it will hold.  

Outlook

I am less optimistic than I was last week but still feel like rates will not move meaningfully higher in the near-term.  I will shift to a neutral position.

Current Outlook: neutral

Stocks slide and mortgage rates hang steady

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

If you’re like me then your NCAA men’s basketball bracket is officially busted.  With two #1 seeds eliminated in the first weekend I will now focus my sporting attention on the upcoming Masters golf tournament.  Speaking of golf, do you know why Virginia and Xavier fans only plan 14 holes? They can’t make it to the final four.

US stocks slide

US stocks fell by approximately 1% last week and are down sharply again today on news that data from Facebook may have been breached in 2016 and improperly used by a third party vendor in the presidential election.  Facebook shares are bringing down the broader market.

When stocks decline it typically helps interest rates improve.  Thus far mortgage rates are basically unchanged.

The Fed

The Federal Reserve Open Market Committee is scheduled to meet Tuesday-Wednesday with a monetary policy statement slated for Wednesday.  The markets fully expect the Fed to hike short-term interest rates by .25%.  This is already baked into the mortgage rate offerings you see today.

What can cause interest rates to move are the comments that accompany the rate hike announcement.  Will the Fed move more aggressively to hike rates in lieu of recent fiscal stimulus? Or given that recent inflation and wage growth data has been tepid will they stay the course with a “gradual” approach?

Don’t be alarmed when you hear Wednesday afternoon that the Fed is hiking rates by +.25%.  It does not necessarily mean that mortgage rates will follow suit.

The rest of the week

Aside from the highly anticipated Fed meeting I will be watching for the FHFA home price index report due out on Thursday and durable goods along with new home sales on Friday.

From a technical standpoint the yield on the US 10-year treasury note remains below 2.91%.  As long as this is the case rates should remain near current levels.

Current Outlook: floating

Home Loan Rates stable….for now

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

With today being the first Monday after daylight savings I think we can all agree this is the “Mondayest” Monday of the year.

Mortgage rates stable?

Mortgage rates fared ‘OK’ last week.  For the most part home loan rates were unchanged despite US stock indexes moving higher.  Normally interest rates worsen when stocks do well.

Don’t look now but mortgage rates have traded within a .125% range since mid-February.

Jobs report

Last Friday’s all-important jobs report showed much stronger employment growth than was expected.  However, wage growth actually slowed modestly which is probably why mortgage rates didn’t move higher on the news.  Higher wages can lead to inflation which is the nemesis of mortgage rates.

Rates getting squeezed

The technical outlook for interest rates has me concerned that we may experience a “breakout”.  The yield on the US 10-year treasury note is trading in a tight range between technical support and resistance.  When this happens we sometimes see yields sharply bounce outside of the compressed range.

The week ahead

This week’s economic calendar features a variety of reports that can drive interest rates. Later today the US Treasury will auction off $21 billion in US 10-year treasury notes.  If demand weakens for this asset it would likely pressure home loan rates higher.

On Tuesday we’ll get the latest reading of the Consumer Price Index, on Wednesday Retail Sales, and on Thursday the Producer Price Index.

The safe play is to lock and avoid any possible breakout.

Current Outlook: locking bias

A busy week for housing, for home loan rates 2.91% is key

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

One of my favorite days of the year took place on Saturday when Berkshire-Hathaway released its annual shareholder letter.  If you have never partaken in Warren Buffett’s simple, humorous, and sage advice I encourage you to dive in HERE.  Have kids?  This is all the financial education you need to give them.

Mortgage Rates

Mortgage rates held steady last week and even improved modestly for 30-year fixed rate amortizations.  I had written about the significance of the US 10-year treasury note yielding 2.91%.  Fortunately that technical level did hold and today it is trading at 2.86%.  As long as it trades below 2.91% I expect mortgage rates to hold steady (and possibly improve?).

Housing Data

This week’s economic calendar will tell us a lot about housing.  Earlier today new home sales were reported below economists’ expectations.  However, they are coming off record highs reported in November of 2017.

On Tuesday we’ll see the most current home price index reports from Case-Shiller and the FHFA.  On Wednesday the National Association of Realtors will release the latest pending home sale report.

The Fed

New Fed Chairman Jerome Powell will address lawmakers on Capitol Hill for the first time on Tuesday and Thursday.  Larger projected government spending deficits have increased speculation that inflation pressures will rise.  Inflation is the primary driver of home loan rates so we will be listening closely to his comments.

The Outlook

As long as the yield on the US 10-year treasury note remains at or below 2.91% I feel comfortable floating.  However, longer-term trends are still concerning so my advice is use caution this week.

Current Outlook: cautiously floating

State of the Union speech may pressure mortgage rates higher

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

On Tuesday President Trump will deliver the annual State of the Union Address to Congress.  Some people think that Congress should work towards increasing the Federal minimum wage.  If anyone knows about doing the minimum for their wage it seems like a great place to start.

What legislative priorities will the President focus on in his speech? Any emphasis on infrastructure spending could add fuel to the fire in terms of mortgage rates increasing.

The tax reform law which passed in December has already added $1.5 trillion in deficit spending over the next decade.  Additional infrastructure investment without means to pay for it would put further pressure on interest rates to move higher (CLICK HERE to learn how).

Interest rates are currently at the highest levels since April of 2014.  There are a variety of factors contributing to higher home loan rates.

Notably the Fed has been hiking short-term interest rates for the past couple years and the longer end of the yield curve has remained flat.  It appears longer durations are following suit.

In addition, although inflation measures remain tepid the economy is growing and unemployment is near historic lows.  Speaking of employment we’ll get a new all-important jobs report this Friday.  The markets are currently expecting ~190,000 new jobs.

On Tuesday the latest S&P Corelogic Case-Shiller Home Price Index will be released as well as Consumer Confidence.

This column has been recommending a locking position ever since the US 10-year treasury note eclipsed 2.50% back on January 10th.  Since then mortgage rates have increased by .25%-.375%.  I continue to recommend a locking stance.

Current Outlook: locking

The stock market rally is not helping home loan rates

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

On this day in 1803 President Thomas Jefferson requested funding from Congress for the Lewis and Clark expedition.  The funding package was for $2,500 in 1803 dollars which equates to $52,252 in today’s dollars.  Any guesses as to whether or not our current government could accomplish the same feat as cheaply?

Government expeditions aren’t the only thing that have become more expensive.  Just take a look at the stock market.  Earlier today the Dow Jones Industrial Average (DJIA) eclipsed 26,000 for the first time.

Only seven trading sessions have passed from when the DJIA eclipsed 25,0000.  Should it close above 26,000 later today it would be the first time in the market’s 120-year history that it has increased by 1,000 points this quickly.

Typically, when stocks rally it hurts mortgage rates because it encourages money to flow out of the bond market and into equities.  As we know mortgage rates have increased by ~.25% over the past few weeks and the stock market has had an influence.

Momentum in the stock market suggests that home loan rates will have a difficult time moving lower in the near-term.  I think the best we can hope for this week is for them to remain constant and I won’t be surprised to see them edge higher.

In my personal opinion US stocks are currently overvalued as compared to long-run valuation comparisons (see HERE) but that doesn’t mean we’ll see a near-term correction.

For now I recommend locking.

Current Outlook: locking

A busy economic calendar and potential vote to drive mortgage rates

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

Happy Birthday to John Burr Williams who would have turned 117 years old today!

In case you’re not familiar with that name (see HERE) he wrote a book called The Theory of Investment Value in 1938 which is widely regarded as the foundation of “Fundamental Analysis”.  His theories are critical to evaluating investments in real estate (and other assets).

Mortgage rates are essentially sideways from last week which is good news given the fact that US stocks traded at all-time highs.

Following a relatively quiet economic holiday week the calendar is jam packed for the next few days.

Housing in the news

Earlier today new home sales were reported and were much stronger than expected (+6%).  The pace of new home sales is currently at the highest level in 10 years!

Tomorrow we’ll get the latest S&P Case-Shiller Home Price Index and on Wednesday we’ll see pending home sales from the National Association of Realtors.

Inflation and the Fed

On Thursday the Personal Consumption Expenditure price index will be released which is the Fed’s favorite gauge of inflation.  Analysts do not expect a large uptick in inflation but if prices rose at a faster clip than is expected it would likely hurt home loan rates.

The Fed is widely expected to raise rates when they meet in a couple weeks.  Since the markets are already expecting this action that move will not impact mortgage rates (despite what the media coverage says).

Tax reform?

The big question is whether or not the Senate will vote on the tax overhaul bill.  Should legislation pass it is assumed that the stock market will benefit which would likely hurt mortgage rates.

From a technical perspective interest rates appear to be in a sideways pattern.  Unless it appears that tax legislation will be voted on and pass I will maintain a floating bias.

Current Outlook: cautiously floating