Tag: portland mortgage expert

Fed stays put as do mortgage interest rates

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

Seventy one years ago a wood raft carrying five people arrived at an island near Tahiti after a 101 day journey from Peru.  The raft was captained by Norwegian Thor Heyerdahl and supported his thesis that Polynesia’s earliest inhabitants may have migrated from South America.  

The story was later made popular in the best-selling book Kon-Tiki.  

The Fed

It looks like it will be about 101 days from the Fed’s last rate hike to the next one.  

As expected the Fed did not hike short-term interest rates last week.  According to CME Group there is a 93% probability that the Fed will hike by .25% when they meet in mid-September.  The Fed last hiked short-term interest rates back in mid-June.

As a reminder the Fed does not directly control mortgage rates but their comments and actions can influence them.  

Jobs Report

This past Friday the Labor Department released its monthly employment report.  It showed that the US economy created 157,000 jobs during July and wages grew modestly.

With the unemployment rate at 3.9% the labor market is deemed to be tight which we would expect to pressure wages higher.  If wages grow too quickly then it could lead to inflation which is not friendly for mortgage rates.

The Week Ahead

Speaking of inflation it is about the only significant event scheduled for release this week.  On Thursday we’ll get a look at the Producer Price Index and on Friday we’ll get the latest reading of the Consumer Price Index.

In the absence of a heavier economic calendar I would expect interest rates to react to technical trading patterns.  The technical signals suggest it will be much harder for rates to improve this week than for them to worsen.  I would recommend carrying a locking bias into the latter half of this week.

Current Outlook: locking

Mortgage rates steady despite strong economic growth

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

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Mortgage Rates Steady

On Friday the Commerce Department reported the US economy grew by 4.1% during the second quarter.  This was the strongest growth since the third quarter of 2014.  

Normally good news for the economy is bad news for mortgage rates.  However, analysts had been expecting an even stronger number so home loan rates remained steady.  

Pending Home Sales

The National Association of Realtors released its monthly pending home sales report today.  It showed that the the number of homes currently in contract increased month-over-month (+.9%) but is still down year-over-year (-2.5%).  

If you’ll remember last week the existing home sales report showed a slight increase to the supply of homes which may explain why we see more pending sales.  The trends in the housing market continue to suggest a more balanced market ahead.  

The Fed

Fed officials will meet this week and make a decision about short-term interest rates.  The markets currently expect the Fed to hold steady at this meeting but hike short-term rates by .25% at the September meeting.

Even if the Fed does not hike rates their comments can still impact mortgage rates.  

The Week Ahead

This week’s economic calendar is busy.  

On Tuesday we’ll get the latest Case-Shiller Home Price Index report and the Fed’s favorite gauge of inflation (Personal Consumption Expenditure price index).  On Wednesday we get the aforementioned Fed announcement and on Friday the all-important jobs report.

Current Outlook: locking

Home loan rates move higher along with oil prices

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

Sometimes our best ideas are formed when we least expect it. This is true for the guitarist Slash who during a band warm up played a string skipping riff that he initially disdained.

However, the rest of the band asked him to play it again and later the riff formed the foundation of “Sweet Child of Mine” which entered the Billboard top 40 on this day in 1988. The hit would eventually climb all the way to #1 and ultimately help catapult Guns N’ Roses to become one of the most famous rock bands of all time.

Home Loan Rates
Mortgage rates are also climbing higher. Last week I warned that we may be in store for a “break-out” following three weeks in which home loan rates remained flat.

Unfortunately, rates decided to break higher instead of lower.

Oil prices
You may have noticed that US consumers are paying more at the pump. Oil prices have risen by ~20% in 2018. Prices spiked this morning after President Trump sent a threatening tweet directed at the president of Iran.

Nearly 40% of the global oil market flows through Iran so if there were a disruption it would certainly move prices higher. Higher prices for oil would be inflationary which would not be good for home loan rates.

Existing Home Sales
The National Association of Realtors released its monthly existing home sales report today. It showed that the number of sales declined modestly in June.

The median home price for the US reached an all-time high at $276,900.

The most interesting part of the report was that the total inventory of homes increased for the first time since June of 2015. Might this be a signal that a more balanced market is near?

The Week Ahead
This week’s economic calendar is relatively light. We’ll get new home sales on Wednesday and Q2 gross domestic product on Friday.

Momentum is not on our side. I recommend locking.

Current Outlook: locking.

Home loan rates remain flat, risk of break out build

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

It all started with $6,000 in February of 1940 when the US Government granted that sum to a group of researchers who were curious about the potential for fissionable materials to be used for military purposes.  The original $6,000 later ballooned to over $2 billion and on this day in 1945 the Manhattan Project first “successfully” tested the atom bomb.

Home Loan Rates

Mortgage rates have been anything but explosive over the past two weeks.  Home loan rates have remained flat over that timeline.

Inflation

Price pressure is the primary driver of long-term interest rates.  

Last week both the Producer Price Index and the Consumer Price Index showed price increases above the Fed’s target of 2.0%.  The reports lend credibility for the Fed to maintain its rate tightening policy. It also increases the probability that mortgage rates will increase and not decrease.

Retail Sales

Although consumers may be paying higher prices for goods it does not seem to be slowing sales.  This morning the retail sales report showed better than expected activity.  Many analysts are pointing to federal income tax cuts as the primary reason why.  

Good news for the economy tends to be bad news for mortgage rates.

The Week Ahead

The economic calendar is fairly light this week.  Fed Chairman Jay Powell will be speaking on Tuesday.  On Wednesday we’ll get a look at housing starts and building permits.  On Thursday we’ll get leading economic indicators.

Technical signals

Mortgage rates have remained relatively flat for almost three weeks.  Any time rates remain flat for extended periods of time it increases the chances of a “break-out” which is when they move sharply higher or lower.  There is no telling when they will “break” and if they will break in our favor. The safe play is to lock in but ultimately it is a coin flip.

Current Outlook: neutral

Mortgage rates at best level since April, time to lock

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

On this day in 1846 the United States captured a small settlement called Yerba Buena located in a bay.  This site is now home to one of the most expensive housing markets in the world. SEE HERE for a parody on some of the rental offerings in this city which was later named San Francisco.  

Home Loan Rates

Mortgage note rates remained unchanged last week although the underlying closing costs improved modestly.  Pricing on mortgage rates are at the best levels since April.

Jobs

Last Friday’s all-important jobs report is being referred to as “goldilocks”, not too hot and not too cold.  It showed 213,000 new jobs created during the month of June and the US unemployment rate at 4.0%.  Wages increased moderately.

Overall, it was a healthy report but not too healthy to stoke inflation fears and push mortgage rates higher. 

 

The Week Ahead

There are not a lot of economic releases scheduled for this week but there will be some key events.  On Wednesday we’ll get the Producer Price Index, which reports on prices at the wholesale level of our economy, and on Thursday we’ll get the Consumer Price Index, which reports on prices at the retail level.  

Inflation is the primary driver of long-term interest rates including mortgages.  Inflation has been ticking higher but not enough to pressure rates too badly.  Any signal that inflation is accelerating would be bad for home loan rates.

The US Treasury is set to deliver $69 billion in fresh debt supply this week.  This is 23% more than was offered last year at this time.  The extra debt is being issued to fund the federal income tax cuts.  The additional debt supply will make it harder for mortgage rates to improve.  

After improving over the past couple weeks I think interest rates are ripe for reversal.  I am going to recommend a locking position.

Current Outlook: locking

Holiday shortened week could cause volatility

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

If we celebrated the day that the Continental Congress voted on the Declaration of Independence from Great Britain then we wouldn’t be in the office today. It was actually on July 2, 1776 that the colonies voted to approve the Declaration of Independence. However, following the nearly unanimous vote Thomas Jefferson took the document, made a few edits, and it was adopted on July 4, 1776. Happy 4th!

Mortgage rates adopted modest improvements last week.

The Week Ahead
It is a holiday week and the financial markets will close early on Tuesday and remain closed until Thursday. During holiday weeks trading desks tend to be lightly staffed. With fewer buyers and sellers in the marketplace we have to be on guard for volatility.

Jobs
The economic calendar this week is compressed with the highlights coming Thursday and Friday. On Thursday we’ll get minutes from the last Fed meeting at which they hiked short-term rates.

On Friday we get the all-important jobs report. Analysts are expecting ~190,000 new jobs created. A number north of that estimate would likely pressure rates higher and vice versa.

US Stocks
US stocks continue to slide on fears of trade tensions. Since the middle of July the S&P 500 is off about 3% and mortgage rates have improved by ~.125%.

Technical Trading Patterns
The yield on the US 10-year treasury note continues to trade below 2.90%. As long as we remain at or below 2.90% I will continue to recommend a floating position.

Current Outlook: floating

Stocks slide on trade fears helping mortgage rates

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

How does a team go undefeated in the World Cup and not win the whole thing?  Easy, not qualify. For those US soccer fans there is reason to celebrate today.  On this day in 1950 the US men’s soccer team beat England in a major upset.  

Mortgage rates traded sideways last week.

US Stocks

The US stock market is not celebrating the trade threats that continue to escalate between the US and China.  Over the weekend the Trump Administration announced rules which will limit Chinese companies from investing in US technology companies.  

US stocks opened sharply lower this morning. Bad news for the economy tends to be good news for home loan rates.

Housing

Last week the National Association of Realtors announced that the pace of existing home sales had slowed in May.  However, the median home price continued to climb on tight supply.  The median home price in the US has increased for 75 straight months.

Earlier today the Commerce Department announced that the number of contracts for the purchase of newly constructed homes increases substantially year-over-year.  This is welcome news given that there continues to be a shortage of housing.

Technical Trading Patterns

The yield on the US 10-year treasury note has broken below an important technical layer.  If it can close below 2.88% then it may be a signal of lower rates on the horizon.  Fingers crossed.

The Week Ahead

This week’s economic calendar kicks off tomorrow with the Case-Shiller Home Price Index.  On Wednesday we’ll see durable goods and pending home sales. On Friday we’ll get personal income and the Fed’s favorite gauge of inflation.  

I recommend floating as long as the US 10-year treasury note is at or below 2.90%.  If it reverses higher then we’ll need to lock in.

Current Outlook: floating

Are mortgage rates likely to increase or decrease? Anyone? Anyone?

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

On this day in 1986 one of the greatest movies of all time was released. Does anyone know which movie? Anyone? Anyone? (see movie reference HERE).

Last week US stocks rallied and home loan rates moved which direction? Anyone? Anyone? They increased modestly.

The Week Ahead
The calendar is full of significant events this week. There won’t be anytime to take a day off (had to sneak in another movie reference).

Treasury auctions
The US Treasury has auctioned $32 billion of 3-year and $22 billion of 10-year notes already this morning. Tomorrow they will auction an additional $14 billion of 30-year bonds. The added supply of fresh debt will make it hard for home loan rates to improve this week.

Inflation
On Tuesday and Wednesday we’ll get fresh readings on the Consumer Price Index and Producer Price Index. Inflation has been trending higher and remains the primary driver of long-term interest rates including for mortgages.

The Fed
The Federal Open Market Committee meets Tuesday-Wednesday and is expected to announce a +.25% hike to the Federal Funds Rate mid-week. The Fed does not directly control mortgage rates but their comments and actions can influence them. If you have not locked in a rate don’t fret. The .25% rate hike is already baked into the rates you see today.

Technical trading patterns
Momentum is not on our side. Rates worsened modestly last week and have more room to worsen this week. I think we have more to lose than to gain so will maintain a locking outlook.

Current Outlook: locking

Turmoil in Italy helps US mortgage rates improve

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

Have you seen the $170 paperclip from Prada (seriously-see HERE)?  I wonder how many will sell today given that it is National Paperclip Day.  I will be “celebrating” with a more modest version.

Italian political woes

US mortgage rates are benefitting from political turmoil in Italy.  Over the weekend the Italian President blocked the formation of a coalition government that would have given more power to the anti-European Union parties.  Remember what happened to US interest rates 3 years ago when Greece threatened the stability of the union?  (hint: they were lower.)

Interest rates in Italy and Spain spiked over the weekend which has prompted a flight to safety in the global financial markets.  Anytime uncertainty grows the US tends to benefit because it is considered a relatively safe place to invest capital.  As a result of heightened demand for US securities, including mortgage-backed bonds, mortgage rates have improved.

Housing Market

Earlier today the most recent version of the S&P Case-Shiller Home Price index was released.  The data showed continued gains in home prices across the nation. According to the report home prices in Portland increased by 6.7% over the past twelve months.  Seattle showed the highest appreciation at 13%.  

As long as the supply of homes for sale remains low I expect home prices to hold firm.

The Week Ahead

The economic calendar is full of significant releases.  On Wednesday we’ll get the Fed’s beige book and the ADP employment report.  On Thursday we’ll see personal income, core inflation, and pending home sales.  On Friday we get the all-important jobs report.  

The drama in Italy could overshadow these reports.  For now we’ll recommend floating as momentum is on our side.  However, I don’t expect the longer-term trend of rates worsening to change.

Current Outlook: floating

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