Tag: portland mortgage broker

Mortgage Rate Update July 28, 2016

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

Mortgage note rates are unchanged from the beginning of the week but closing costs are moderately lower so in fact conditions have improved.

The primary economic highlight for this week took place yesterday when the Fed released its post-monetary policy meeting statement.  As expected they left short-term interest rates unchanged (as a reminder the Fed does not directly control mortgage rates).  The tone of their statement has led the markets to believe that the Fed may hike short-term interest rates again as soon as September.  I happen to believe that December will be the absolute soonest and I won’t be surprised if they don’t hike at all until 2017.

Over the long run we’d expect mortgage rates to move higher should the Fed hike short-term rates.  However, in the short run mortgage rates could actually improve on news of a rate hike.  Since rate hikes are used to curb inflationary pressure and inflation is the nemesis of mortgage rates this may not be so bad.

Tomorrow Q2 gross domestic product figures will be released.  A strong number would likely be bad news for mortgage rates and vice versa.

I am going to maintain a floating bias.

Current Outlook: carefully floating

Mortgage Rate Update July 11, 2016

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

Mortgage rates are now back at the all-time low levels established in November of 2012.

Normally when the US stock market rallies mortgage rates suffer.  However, these are not “normal” times.  Following the “Brexit” vote investors around the globe have been seeking “safe haven” in the US financial markets.  As a result, money from around the world has been pouring into our bond market, helping mortgage rates improve, and our stock market, pushing values higher.

Portland OR mortgage SP 500 07-11-16

Portland OR Mortgage rates 10yr 07-11-16

A further signal that the financial markets are not behaving in a “normal” manner is evidenced by Friday’s all-important jobs report.  The report showed that the US economy added 287,000 new jobs during the month of June far exceeding expectations of +170,000.  Under normal circumstances a stronger than expected employment report pushes mortgage rates higher but they barely budged.

Low mortgage rates are creating a wave of new loan applications in the mortgage industry.  Last week the Mortgage Bankers Association reported that the volume of new applications for home loans increased by 14% thanks to new inquiries for refinancing increasing by 21%.  This does not bode well for appraisal turn times which are already at ~4 weeks for the Portland-metro area.

Looking ahead, the economic calendar is fairly light this week.  The highlights will come on Thursday and Friday when we’ll see a fresh set of inflation data.  From a technical perspective interest rates in the US look ripe for reversal but these signals which would be alarming in “normal” times may not play a role.  Nevertheless rates have essentially never been substantially better than they are today.  Let’s lock!

Current Outlook: locking bias

Mortgage Rate Update May 19, 2016

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

Mortgage rates worsened following yesterday’s release of the minutes from the most recent Fed meeting.  Have the markets overreacted?

The chart below shows the yield on the US 10-year treasury yield which increased sharply yesterday (mortgage rates followed suit).

05-19portland mortgage rates
Why this reaction?  The Fed meeting minutes signaled a possible Fed rate hike as soon as June (Fed meeting scheduled for June 14-15th).  However, in my view I do not believe this will happen.  The last Fed meeting took place in April before the most recent monthly jobs report was released.  As a reminder the most recent jobs report was weaker than expectations making it less likely that the Fed will hike rates.

I went into this week with a locking recommendation and that has proven to be the correct call.  Given that I believe the markets have overreacted to the release of the Fed meeting minutes I am going to shift back to a floating stance.

Current Outlook: floating

Mortgage Rate Update May 16, 2016

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

Mortgage rates remain near 3-year lows making it a great time to lock in a rate on a new home purchase or refinance.

Given that financial markets tend to operate in a cyclical manner I am currently recommending that customers lock their rate since they have trended lower over the past couple weeks (and therefore may “cycle” higher in the next couple weeks).

That said, many of the major banks have been revising their year end forecast for interest rates lower.  Last week Goldman Sachs lowered their expected yield on the US 10-year treasury yield following similar moves by Bank of America and Morgan Stanley.  Of course, if the banks knew for certain then there would be no need to revise so take this news for what it’s worth.

Recently, many of the major banks have peered into their crystal balls and revised their interest rate forecasts lower.
Recently, many of the major banks have peered into their crystal balls and revised their interest rate forecasts lower.

The economic calendar for this week is relatively short but there are some important releases.  Tomorrow the Labor Department will release the Consumer Price Index (CPI).  Inflation is the nemesis of mortgage rates and lately the year-over-year CPI figure has been creeping higher.  If this trend continues I wouldn’t be surprised to see rates tick higher.

On Wednesday the minutes from the most recent Fed meeting will be released.  Any additional information on the Fed plans certainly have the ability to move the markets.

I am going to recommend a locking bias simply because interest rates are extremely attractive levels.

Current Outlook: locking

Mortgage Rate Update May 9, 2016

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

Mortgage rates are modestly better to start the week.

In case you missed it Friday’s all-important jobs report was a miss.  The markets had been expecting 205,000 new jobs for the month of April and instead the report showed only 160,000.  This follows last month’s report which showed that only 156,000 new jobs were created during March.

Despite the smaller than expected gains the US unemployment rate remained low at 5.0%.  With unemployment at such a low level it’s hard to imagine that an economic slowdown is on the horizon.  However, take a peek at the chart below:

Unemployment Rate Before Resssion5-9-2016-Portland-or-mortgage-rates

This demonstrates that going back to 1950 every recession starts with the unemployment rate reaching a multi-year low just before the economy begins to contract (recessions marked by pink highlights).  We don’t know if/ when a recession will come about nor how severe it will be.  It is interesting to note that US mortgage rates tend to dip during recessionary periods.

The economic calendar is relatively light this week.  I will shift to a floating position.

Current Outlook: floating

Mortgage Rate Update May 5, 2016

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.

The economic highlight of the week arrives tomorrow when the Bureau of Labor Statistics releases the monthly employment report (click HERE to learn how the report impacts mortgage rates) for April.  Current expectations are that 205,000 new jobs will be announced.

On Wednesday, private payroll company ADP released its version of the report which showed that only 156,000 new jobs were created last month.  This would suggest that tomorrow’s report may come in lower than expectations which would bode well for mortgage rates.

Portland mortgage rates ADP Employment Report5-4-2016

 

However, if you’ll remember back two weeks ago (see HERE) the weekly jobless claims numbers have been coming in at multi-decade lows.  This would leave us to believe that tomorrow’s report may be better than expectations.

As is the case every month this report is very hard to predict.  Given the current technical trading signals and the fact that mortgage rates are better this week than they were last week I am going to recommend locking in today.

Current Outlook: locking

Mortgage Rate Update April 14, 2016

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

We had switched to a locking bias on Monday and that has proven to be the right call.  Mortgage rates have worsened very mildly since Monday.  This statement will contradict what you’ll hear from the media over the next couple days.

The Freddie Mac Primary Market Survey, which is what major media outlets tune into, was released today and showed that rates dipped slightly from last week.  Freddie Mac’s survey lags the market.

Lenders voluntarily submit interest rate information Monday-Wednesday of every week and then Freddie Mac releases the results on Thursday.  The results today simply show that mortgage rates were lower this Monday-Wednesday as compared to last Monday-Wednesday.  Unless rates move lower Monday-Wednesday next week next Thursday’s report will confirm that rates have worsened slightly.

Looking at the markets, the Consumer Price Index (CPI) was released today by the Labor Department and it continues a trend of tepid inflationary pressure.  This is friendly news for mortgage rates as inflation is the nemesis of long-term interest rates.

In a separate report weekly jobless claims matched the lowest level in over 40 years.  This is a positive sign for the economy which tends to be bad news for mortgage rates but at this point rates have not reacted.

From a technical perspective the US 10yr treasury yield and mortgage-backed bonds are trading at important levels after worsening over the last 3 days.  I am cautiously optimistic that they will catch technical support and rates will return to the levels we had at the beginning of this week.  But we need to be cautious given that rates are very near all-time lows.

Current Outlook: floating bias

Mortgage Rate Update March 24, 2016

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

Mortgage rates are unchanged from last week.

It’s been a relatively quiet week with regard to economic news.  Not only are people not paying attention because they’re on spring break but there is also not much to pay attention to.

Quietly, the US stock market has been on a nice rally.  Since mid-February the S&P 500 has had 21 positive trading days and only 8 negative days.  Over that timeline the S&P 500 has risen by ~11.5%.

03-24SP500-Portland mortgage rates

Is the market overheated?  One contrarian predictor of the stock market is investor sentiment.  When investors are “bullish” on the markets it’s usually a great time to sell and vice versa.  In a recent research note Peter Boockvar of CNBC pointed out that investor sentiment is currently at its highest level since July 2015.  In case you need a reminder on what happened in August last year refer to the chart above.

If stocks react lower in the coming weeks, as many analysts are starting to predict it would likely generate demand for safe-haven assets including US debt instruments which would drive yields lower.  I am going to maintain a floating bias to see if this pattern comes to fruition.

Current Outlook: cautiously floating

Rate Update December 2, 2009

Posted on by Evan in Rate Update

Mortgage rates are higher than yesterday.

Our comment in yesterday’s ‘rate update’ that mortgage-backed bonds (MBSs)”appeared ripe for reversal” ended up being prophetic.  MBSs dropped 65 basis points which is the largest one day increase since October 9th.  Mortgage rates work inversely with the price of MBSs so we expected rates to be modestly higher this morning.

Looking ahead Friday brings us the all-important jobs report (click this link to understand why this is such an important economic report for mortgage rates).

This morning the payroll company ADP released their monthly jobs report and it showed that private sector employment lost another 169,000 jobs in November.  Currently expectations for Friday’s government report are for 125,000 in job losses.

We remain in a locking position.

Current outlook: locking