Tag: portland mortgage broker

Mortgage Rate Update December 19, 2016

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

Housekeeping: This will be the last ‘rate update’ of 2016.  The next update will take place the first week of January.  Thank you for your interest in the content.  Have a happy and joyous holiday season!

Mortgage rates got stung following the Fed’s rate hike decision last week.

As expected the Fed hiked short-term interest rates by .25% on Wednesday.  As a reminder the Fed does not directly set mortgage rates but as we witnessed their comments can influence the financial markets.

In the Fed’s monetary policy statement they said they expect to hike short-term interest rates three more times in 2017.  This was more than the markets had been expecting and as a result long-term interest rates, including mortgages, moved higher.

Mortgage rates remained historically low throughout 2016 but ended on a sour note.

Both mortgage rates and the yield on the US 10-year treasury note have increased by ~.80% since election day.  I know I have been overly optimistic about a reversal for the past two weeks so I am hesitant to call one this morning but the markets are trading in our favor.

Strictly looking at technical trading signals the US stock market appears overcooked and interest rates appear ripe for a modest reversal.  Technical trading signals are often accurate but the timing of reversals can take longer than anticipated.  I recommend floating.

Current Outlook: floating

Mortgage Rate Update December 8, 2016

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

Mortgage rates are modestly improved from Monday.  Pricing on mortgage rates improved the first three days of this week but have actually given a little back this morning.

The big news impacting the financial markets this morning is an announcement from the European Central Bank (ECB).  ECB President Mario Draghi stated that they would maintain their bond buying program to help support low interest rates in Europe but that they would scale back the volume of the purchases.  Initially interest rates here in the US moved higher on the announcement.

US stocks continue to trade at or near all-time highs.  When stocks do well mortgage rates tend to suffer.

As I have been stating since the end of November it is my opinion that US interest rates have overreacted to the results of the election.  History also supports this view.  The Wall Street Journal ran a graph showing the last few times that the yield on the US 10-yr treasury note have increased acutely.

Source: Wall Street Journal
Source: Wall Street Journal

Each time yields eventually stabilized and reversed lower.  There is no guarantee this will happen again.  Furthermore, if rates do improve from current levels I do not expect them to move all the way back to where they were prior to the election.  But, I do believe with time rates will move .125%-.25% lower.  I wish I knew when!

Current Outlook: floating

Mortgage Rate Update December 5, 2016

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

Mortgage rates are mostly unchanged from last week.

US stocks are starting the week off higher.  Typically, when stocks rally mortgage rates suffer.  Interest rates are modestly worse as compared to Friday but overall pretty even.

This week’s economic calendar is relatively light.  Therefore, I expect technical trading patterns to play an important role.  Currently the US 10-year treasury note is yielding 2.39% which is just above an important technical level of 2.385%.

12-5-16-portland-mortgage-broker-us-10yr

If the yield can end the day at or below 2.385% I could see mortgage rates improving by .125%-.25% later this week.  If not, it would add strength to this technical level and I will shift to a locking bias.

That said, the next Fed meeting is scheduled for next Tuesday-Wednesday (13th-14th).  The markets are currently predicting a ~95% probability that the Fed will hike short-term interest rates.  As a reminder, the Fed does not directly set mortgage rates.  And in fact, a hike could actually help mortgage rates improve because they are anti-inflationary.

Current Outlook: floating

Mortgage Rate Update December 1, 2016

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

Mortgage rates have worsened modestly this week.

On Monday I had recommended a ‘floating’ position with the hopes that the yield on the US 10-year treasury would respond to technical trading patterns and reverse below 2.38%.  Pricing on mortgage rates did improve Monday-Tuesday but starting yesterday rates have worsened.

The yield on the US 10-year treasury is now up to 2.46% and mortgage rates have worsened by .125% in response.

Wrfel mit Aufschrift JOBS auf einer Tageszeitung

Tomorrow we get the last all-important jobs report for 2016 (and the last one prior to the next Fed meeting).  The markets are currently expecting +180,000 new jobs added during the month of November.  Not coincidentally the average monthly job growth from January-October 2016 has been +181,000.

Aside from watching the number of new jobs added analysts will be keeping a close eye on average hourly earnings.  In last month’s report average wages increased by 2.8% compared to the year prior which represented the largest increase since 2009.  Should wages continue to press higher it would raise concerns about wage-based inflation.  Inflation is the primary driver of mortgage rates.

From a technical perspective the damage of not locking Monday-Tuesday has been done.  I am going to maintain a floating bias.

Current Outlook: floating

Mortgage Rate Update November 28, 2016

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

Mortgage rates are effectively unchanged from last week.

Although there is no significant economic data out today the next few days will bring plenty of important data points.  Tomorrow we’ll get the latest reading of the Case-Shiller Home Price index and Q2 GDP.  On Wednesday we’ll see pending home sales, personal income, and the Personal Consumption Expenditure price index.  On Friday we get the all-important monthly jobs report.

As we know interest rates have risen sharply since the election and the technical trading patterns in the interest rate markets suggest we may be in for a brief reversal.  After reaching a multi-year high on Wednesday the yield on the US 10-year treasury note has bounced lower and I think it will move towards ~2.20%.

portland-mortgage-rates-10yr-11-28-16

Assuming this happens I would expect mortgage rates to improve by .125% compared to current levels.

Current Outlook: floating

Mortgage Rate Update November 21, 2016

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

Mortgage rates look as though they may stabilize this week and possibly even reverse lower.

Since the election the yield on the US 10-year treasury note, which mortgage rates tend to track, has had its steepest two-week climb in over 15 years!  Meanwhile, the US stock market has reached all-time highs.

This week’s economic calendar is compact given the Thanksgiving Holiday on Thursday.  Tomorrow we’ll see the latest reading on existing home sales, on Wednesday we’ll get durable goods, new home sales, and minutes from the last Fed meeting.

Happy Thanksgiving message with a white pumpkin

Speaking of the Fed, earlier today Vice Chairman Stanley Fischer all but told the markets that they intend on hiking rates at their next monetary policy meeting.  According to CME Group there is currently a 95% chance they will do so.  A Fed rate hike could actually help mortgage rates at this point.

From a technical perspective the steep increase in mortgage rates looks like it may have gone too far.  I wouldn’t be surprised to see rates improve .125% later this week or early next.  We will float.

Current Outlook: floating

Mortgage Rate Update November 17, 2016

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

Mortgage rates have stabilized following last week’s rout in the bond market.

A fed rate hike next month looks to be certain following this morning’s remarks by Fed Chairwoman Janet Yellen.  She told lawmakers on Capitol Hill that a rate hike would come “relatively soon” which in her own cryptic way is being interpreted to mean ‘next month’.

Meanwhile, the Labor Department reported only 235,000 Americans filing for initial jobless claims last week.  This is the lowest mark in 43 years!  This weeks report is used as the sample week for the next monthly jobs report which will be released on December 2nd so lets not act surprised if that report shows strong growth.

The Labor Department also released its latest reading on the Consumer Price Index (CPI).  It showed that core prices rose by 2.1% as compared to a year earlier.  Consumer prices have now risen in seven of the past eight months and the pace of increases is increasing which gives credence for the Fed to hike short-term interest rates.

portland-mortgage-broker-housing-starts11-17-2016

In housing news the Commerce Department reported that the number of housing starts increased by 25.5% in October as compared to a month earlier.  This is the strongest pace since August of 2007 and is a welcome sign from the standpoint that additional supply should help dampen annual price appreciation to a more moderate level.

Everything I am reading is suggesting higher mortgage rates on the horizon so I will maintain a locking bias.

Current Outlook: locking bias

Mortgage Rate Update November 14, 2016

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

Mortgage rates have increased substantially following the surprise election win by President-elect Donald Trump.

Below is a chart showing the yield on the US 10-year treasury yield.  As you can see yields jumped from ~1.80% prior to the election to ~2.20% today.  Mortgage rates have increased by .375% during that time.

portland-mortgage-rates-nov-14-2016-10yr

Why are rates increasing in reaction to Trump’s election?  At this point analysts are speculating that his economic policies will be inflationary and inflation is a nemesis for mortgage rates.

Speaking of inflation the economic calendar for this week includes a report on import prices (Tuesday), Producer Price Index (Wednesday), and the Consumer Price Index (Thursday).  In addition we’ll get retail sales (Tuesday) and housing starts (Thursday).

From a technical perspective the current outlook is difficult to handicap.  On one hand, markets tend to overreact to major events such as last week’s election.  Therefore, I wouldn’t be surprised to see rates rebound and improve a little.  That said, momentum is firmly against us.  So waiting any longer to lock could mean accepting a higher rate than what is available today.

Current Outlook: locking bias

Mortgage Rate Update November 7, 2016

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

Mortgage rates are unchanged from last week.

Election day is only 24 hours away.  The stock market is rallying this morning following the FBI’s announcement over the weekend that they would not pursue charges against Hillary Clinton based on a new batch of emails.

Purely looking at the election from the stock market’s perspective the ideal outcome is for Clinton to win the presidential election while the House of Representatives and Senate remain in Republican control.  Since this outcome is optimal for the stock market we can deduct that it is also probably the worst case scenario for mortgage rates (when stocks do well mortgage rates tend to suffer).

In case you missed it Friday’s all-important jobs report showed the US economy created ~161,000 new jobs in October.  In addition, the Labor Department revised the two previously released numbers for August & September higher.  The jobs market remains solid which generally is bad news for mortgage rates.

portland-mortgage-rates-jobs-nov-2016

What was interesting about the jobs report was that average hourly earnings increased by 2.8% from a year earlier.  This represents the largest increase since 2009 and ignites concerns regarding wage-based inflation.

All in all I am not excited about the momentum in the market.  I am going to maintain a locking bias.

Current Outlook: locking bias

Mortgage Rate Update October 31, 2016

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

Mortgage rates are unchanged from the latter half of last week.

Inflation remains top of mind for market analysts.  Inflation is important because it is the primary driver of long-term interest rates, including mortgages.

Earlier today the Fed’s preferred measure of inflation, called the Personal Consumption Expenditure price index, was released.  Core inflation, which excludes volatile food and energy prices, was up 1.7% from a year earlier.  This is the firmest inflation has been in the last couple years.

Jack O' Lantern

The economic calendar is busy this week.  On Wednesday the Fed will deliver its monetary policy statement.  It is not expected that they will hike rates at this meeting but their comments always have the ability to shape the markets.  On Friday we get the all-important jobs report.  The markets currently expect +175,000 new jobs.

From a technical perspective momentum is not our side.  Although rates have stabilized from my last ‘rate update’ it still feels we’re seeing upward pressure.

Have a safe and happy halloween!

Current Outlook: locking bias