Mortgage rates continue to trend lower

It would be glamorous to be reincarnated as a great big ring on Liz Taylor’s finger.”- Andy Warhol

Happy birthday to Andy who would have been 91 today.

Interest Rates

We’ve held a “floating” position for some now and it’s paid off.  Mortgage rates are at their best levels in over three years and some analysts are calling for them to continue to trend lower.

10-Year Treasury Note

The yield on the US 10-year treasury note, which mortgage rates tend to track, has fallen from 2.05%  to 1.75% in the past 5 days.  Over that time mortgage rates have improved by .125%.  I won’t be surprised if mortgage rates improve by another .125% over the next couple weeks.

Yield Curve

With yields falling for longer duration bonds we are back in a scenario where the yield curve is inverted.  Many economists think an inverted yield curve is a signal of an impending economic recession but there are never any guarantees.

China Trade Tensions

Concern over trade tensions pushed US stocks sharply lower on Monday.  At the moment it appears that the US and China are a long ways from solving their trade disputes.  This is not favorable for near-term economic growth but favorable for US interest rates.

Outlook

From a technical perspective mortgage rates are benefiting from momentum.  We could see rates go up later this week but I still believe we are in store for lower rates in the coming months.

Current Outlook: floating bias

 

Mortgage rates back off of historical lows as economic outlook is mixed

You can file this one in the “wish I had reason to celebrate” folder.  Today is #NationalPersonalChefDay!  Don’t forget to pat your chef on the back and thank them for all their hard work.

Interest Rates

Mortgage rates are unchanged this week after increasing by ~.125% last week.

Recession looming?

The US economy is currently in the longest economic expansion in modern history.  It started back in 2009 and has been in tact for 121 months.  Naturally, all good things must come to an end and as this growth pattern grows long in the tooth more and more economists will begin to predict a near-term recession.

Earlier today an index that tracks global freight movement was released and showed seven straight months of contraction.  According to the report the US economy is, “signaling economic contraction.”

I am not sure how reliable this indicator is but if the US economy does move towards economic contraction one would think that US mortgage rates would improve.

Or not…..

Earlier today the monthly retail sales report showed stronger than expected consumer activity.  Furthermore, an index which gauges homebuilders’ confidence also came in higher than anticipated.

The rest of the week

The remainder of the week features Fed Chairman Jerome Powell speaking (later today), housing starts/ building permits (Wednesday), and leading economic indicators (Thursday).

Outlook

In the near term mortgage rates are testing important technical layers.  I expect mortgage rates to be at these levels or possibly even higher in the next 3-7 days.  Beyond that I think mortgage rates will come back down.

Current Outlook: floating bias

Rates modestly worse but long-term trend in tact

Congratulations to the US Women’s soccer team who capped a dominating performance on Sunday by winning the World Cup.  The US recorded 26 goals during their seven games in the World Cup and only gave up 3!

Interest Rates

Mortgage rates are modestly worse to start the week after the Bureau of Labor Statistics released a stronger than expected employment report on Friday.

Jobs Report

The all-important jobs report showed that 224,000 new jobs were created during the month of June and eased recession concerns.  Yields increased modestly following the release.

Home Loan Performance

A strong labor market and healthy home price appreciation is creating conditions for low delinquency.  CoreLogic’s monthly Home Loan Performance Insights Report was released earlier today and shows delinquency is currently at a 20-year low across the US!  It’s hard to imagine a housing crash is on the horizon given that statistic.

The Fed Speaks

Fed Chairman Jerome Powell is scheduled to speak Wednesday and Thursday this week.  The Fed’s Open Market Committee is scheduled to meet July 31st and there is currently only a 5% probability that the Fed will cut rates at that time (the markets assign a 60% chance of a cut at the Sept. 18th meeting).

The minutes from the last Fed meeting are also scheduled to be released on Wednesday.  Should his comments or the minutes alter the outlook for a rate cut it could cause some volatility in the financial markets.

The rest of the week

Aside from Fed speak we’ll be watching the Consumer Price Index scheduled for release on Thursday and the Producer Price Index on Friday.  Hotter than expected inflation could put upward pressure on rates.

The long-term trend remains in our favor so will remain in a floating stance.

Current Outlook: floating

Mortgage rates continue to move lower

Give a man a fish and he eats for a day.  Teach a man to fish and he will neglect his job and family thereafter.”- anonymous

Today is National Go Fishing Day!  As anglers take to the waterways mortgage rates are sinking!

Mortgage Rates

Mortgage rates continue to trend lower prompting many homeowners to evaluate their refinance options.  The Mortgage Bankers Association reported that refinance applications jumped 47% last week compared to the prior week.

European Interest Rates

Yields in the US are following European interest rates lower.  Concerned with declining economic growth European Central Bank President Mario Draghi stated earlier today that he is prepared to cut short-term interest rates and accelerate bond-buying programs with the hopes of driving interest rates down.

The yield on a German 10-year bund is currently negative .30%.  Comparatively the yield on a US 10-year treasury note is trading at ~+2.06%.

The Fed

The US central bank begins their regularly scheduled two-day monetary policy meeting today.  Tomorrow they will announce any changes to US short-term interest rates.  I don’t expect they will cut rates tomorrow but their comments could help mortgage rates improve further.

The Week Ahead

The weekly economic calendar is relatively light.  The highlights include the aforementioned Fed announcement (Wednesday) and Existing Home Sales (Friday).

Momentum is on our side which is why I shifted to a floating bias last week.  I will maintain that position.

Current Outlook: floating bias

Home loan rates remain low as payment performance improves

On this day in 1950, Ben Hogan bested two other golfers in an 18-hole play-off to win the US Open.  The remarkable aspect of the win was only 16 months earlier Hogan was involved in a near fatal car crash that left him unable to walk for months.  Doctors predicted he may never golf again.

The win was Hogan’s third major championship.  Where did Hogan win his first major championship?  Right here in Oregon at the Portland Golf Club!

Mortgage Rates

Home Loan rates have increased very modestly in the past week as trade tensions have eased and US stocks have rallied.  If stock finish in positive in positive territory today it will mark the 7th straight day of gains.

Home Loan Performance

Corelogic released its monthly Loan Performance Insights report earlier and it showed that only 4% of all mortgages in the United States are 30 days or more delinquent.  This is down from 4.3% a year earlier and is near historic lows.

Mortgage loan portfolios are performing extremely well which means credit standards should remain accommodating in the near future.

Home Equity

Contributing to strong loan performance is the fact that most homeowners have a significant amount of equity built up in their homes.  According to the most recent Corelogic Homeowners Equity Insights report the average homeowner has seen a +5.7% increase to their home equity since last year.  

Here in Oregon the average homeowner gained ~$7,000 in equity which is why homeownership is still one of the best ways to build long-term financial wealth.

The Week Ahead

Last week’s all-important jobs report disappointed the markets showing only 75,000 new jobs created during May.  

This week the economic calendar holds significant data released on Wednesday (Consumer Price Index), Thursday (Import/ Export prices), and Friday (Retail Sales & Consumer Sentiment).  

Momentum remains on our side so I will shift to a floating bias.

Current Outlook: floating bias

Existing Home Sales a mixed bag, mortgage rates slightly worse to start the week

Owning your home is still one of the best ways to achieve wealth and as Plato once said “Wealth is known to be a great comforter.”  Happy Birthday to Plato who would have turned 1,592 years old today and he lived forever.

Mortgage Rates

We shifted to a locking bias last week and that proved to be the correct call.  Although mortgage note rates are mostly unchanged the pricing has worsened meaning the accompanying closing costs are modestly worse.

Home Sales

Earlier today the National Association of Realtors released the monthly existing home sales report.  It showed that the number of homes sold during April actually contracted by nationwide.  However, on the west coast the number of existing home sales actually accelerated by 1.8% from March.

Coincidentally, the average number of days on market contracted from 36 days down to 24.  There is no question that the housing market is less frantic than it was a couple years ago but demand remains strong.

The Week Ahead

This week’s economic calendar is relatively light.  On Wednesday we’ll get the minutes from the most recent Federal Reserve monetary policy meeting but no fireworks are expected.  On Thursday we’ll see numbers for new home sales.

Stock Market

In the absence of significant economic data I expect mortgage rates to take direction from the stock market.  If stocks rally then I expect home loan rates to worsen and vice versa.

Investors remain concerned over US-China trade talks and the ongoing Brexit saga.  Any signals that either of these story lines will resolve themselves sooner rather than later would be bad for mortgage rates.

Current Outlook: neutral

 

Mortgage rates trend lower, how long will this last?

If you feel the urge today is National Dance Like a Chicken Day.  Not sure where they come up with these but if the Blazers can win tonight in game one of the Western Conference Finals I will be dancing like a mother clucker!

Mortgage Rates

Mortgage rates continue to benefit from the trade dispute that is ongoing between the US and China.

Last week US stock indexes lost 2%-3% as investors braced for the economic fallout.  When stocks do poorly it tends to help mortgage rates improve.

Stocks are rebounding today which is placing upward pressure on home loan rates.

Loan Performance

CoreLogic released its monthly Loan Performance Insights report for February.  It showed that the number of mortgages in delinquency fell in every category relative to last year and are at 20-year lows.

This may influence lenders to accept more risk in their loan portfolios which means it may become easier for borrowers to borrow money and buy houses.

Technical Guidance

Financial markets tend to work in cycles and home loan rates are no different.

From late March to mid-April interest rates worsened.  Since then home loan rates have been on a winning streak for roughly the same duration.  I am concerned we may see rates reverse and cycle higher.

The Week Ahead

Looking ahead this week we’ll get retail sales on Wednesday, housing starts/ permits on Thursday, and consumer sentiment on Friday.  There are also a series of Fed speakers on the docket.

Current Outlook: locking bias

Home Loan Rates Stable, Home Prices increase at a decreasing rate

On this day in 1789 a crowd of 10,000 gathered outside the Federal Hall in New York City to witness George Washington being sworn is as the first president of the United States.

Washington’s salary as President was $25,000/ year which translates to $722,165 in 2019 dollars.  In comparison, President Trump’s annual salary is $400,000.  There is no data on how much income tax each President paid…..

Mortgage Rates

After increasing modestly last week home loan rates have stabilized and even improved very modestly this week.

The Federal Reserve

The Fed kicks off a regularly scheduled 2-day meeting today which will conclude tomorrow.  It is not expected that the Fed will make any changes to interest rates.

At this point US economic growth remains solid and inflation pressure is relatively muted.  However, the Fed’s post-meeting comments can move the markets so we’ll be listening.

Housing Market

The Case-Shiller Home Price Index was released earlier today.  The report showed that nationwide home price appreciation decelerated from February 2018 to February 2019.

For Portland, the report showed home prices increased by 2.9% from February 2018 to February 2019.  Home prices are still increasing.  However, they are increasing at a slower rate.

The National Association of Realtors released its monthly Pending Home Sales Index report earlier today.  Although the number of homes under contract is down from a year ago it did jump by 8.7% in the west during the month of March compared to February.

Stronger demand may show up next month when we get updated appreciation information.

The Week Ahead

The remainder of the week is busy in terms of economic news.  We’ll get the latest all-important jobs report this Friday.  Analysts are expecting +210,000 new jobs created for April.

We’ll also get the aforementioned Fed statement on Wednesday and other Fed speakers on Friday.

Current Outlook: floating bias

As stocks rally mortgage rates pressured higher

Think your life is busy?  Each year the IRS receives over 290 million tax returns which the IRS receives.  According to the IRS only .50% of all filed tax returns are audited.

The IRS also reports that over 9,000 tax returns are filed where the taxpayer makes more than $200,000/ year but pays $0 income tax.  Has the President released his tax returns yet?

Stock Market

Earnings season is underway and analysts expect in aggregate that corporations will report stable or declining profits compared to last year.

However, financial companies appear to be bucking that expectation.  Last Friday Chase Bank reported better than expected financial results and earlier today Bank of America did the same.

The US Stock market has now completely recovered the declines it incurred at the end of 2018 and the S&P 500 is only 35 points away from all-time highs.  If profits fail to grow and stock prices continue to rally it may reignite concern over valuations which I wrote about last summer (HERE).

Mortgage Rates

As stocks rallied last Friday it pushed mortgage rates up by ~.125%.  See why HERE.

10-year treasury note

The yield on the US 10-year treasury note is currently trading at 2.58% which just below an important technical layer of resistance.  If yields break above this level then I expect mortgage rates to increase an additional .125%.

The Week Ahead

The economic calendar is heavy on new residential construction this week.  Earlier today the Home Builders’ Index was released and showed greater optimism amongst home builders compared to last month.

On Friday we’ll see fresh numbers for building permits and new housing starts.

Current Outlook: locking bias

Mortgage Rates Hold Steady at Multi-Month Lows

In 1930 two men spent $70,000 to buy 365 acres from Fruitland Nurseries Inc. with the vision of building a new golf course.  They hired an architect from Scotland by the name of Alistair MacKenize and by 1933 the course was ready for play.

Fast forward to today and Augusta National Golf Club is one of the most exclusive golf courses in the world.  Starting on Thursday it will play host, as it does each April, to the Masters Tournament and the champion golfer will don the signature green jacket on Sunday afternoon.

Mortgage Rates

Home loan rates are holding steady from last week.  Similarly the yield on the US 10-year treasury note has been almost flat at ~2.5% since the beginning of April.

Jobs Report

Last Friday the Bureau of Labor Statistics released the monthly employment report. It showed that 196,000 jobs were created during March and the unemployment rate held steady at 3.8%.

For the financial markets the results were “Goldilocks” in that they were not too hot, which could have pressured rates higher, and not too cold which may have stoked fears of an economic slowdown.

Brexit

With the original Brexit date of March 29th come and gone EU leaders are meeting on Wednesday to decide if an extension will be granted.  Without an extension Britain will leave the EU on Friday without a trade deal.  Most analysts think an extension will be granted but for how long is not known.

Uncertainty from the Brexit proceedings have helped US interest rates remain low.  Any signals for a quick and orderly exist could pressure rates higher.

The Week Ahead

This week’s economic calendar heats up on Wednesday when the Consumer Price Index and minutes from the last Federal Reserve meeting are released. Recently mortgage rates have not reacted well to Fed meeting minutes.  Speaking of the Fed, Chairman Powell is schedule to give three speeches this week.  His comments can always influence the markets.

Current Outlook: floating