Tag: Portland mortgage rates

Mortgage Rate Update January 19, 2017

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

Well, after a nice 5-week run mortgage rates ticked higher yesterday giving away half the improvements they gained on the way down.

The culprit?  Fed Chairwoman Janet Yellen delivered a speech yesterday in which she stated that Fed officials expect to raise short-term interest rates “a few times a year” through 2019.  This was more aggressive than her previous public comments and leads the markets to believe that inflation expectations may be higher than anticipated.

Speaking of inflation expectations, the Wall Street Journal ran THIS STORY yesterday which confirms just that.  The spread between US treasuries and inflation protected treasuries has been widening signaling that investors believe inflation will be higher in the future than it presently is.  Inflation is the primary driver of mortgage rates.

The jobs picture continues to be strong both nationally and locally.  This is bad news for mortgage rates but good news for housing demand.  The number of Americans filing for initial jobless claims fell last week to one of the lowest levels on record.

Furthermore, it was reported that Oregon’s unemployment rate fell to 4.6% which is down nearly 1% from last summer.

All in all the momentum has shifted against us.  Fortunately we remain within a technical range of trading so we could see rates improve off these levels.  For now though I will shift to a locking bias.

Current Outlook: locking bias

Mortgage Rate Update January 17, 2017

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

Mortgage rates remain at the best levels following the election and about .25% improved from recent highs.

Inflation expectations is the primary driver of mortgage rates.  This is because inflation erodes the purchasing power of future interest payments.  Therefore, when lenders think inflation will rise in the future they charge higher rates of interest to compensate and vice versa.

Inflation is the primary driver of mortgage rates.

Following Donald Trump’s election investors expected higher inflation because of his campaign promises to increase government spending (infrastructure) while cutting taxes.  However, the financial markets are now tapering inflation expectations.

Inflation adjusted treasury yields (nominal yield minus current inflation) have declined to the lowest levels since the election and mortgage rates have also improved off recent highs.

Speaking of inflation the release of the latest Consumer Price Index is scheduled for tomorrow.  It has been trending higher as of late and if this trend continues then of course we’d expect upward pressure on mortgage rates.  Aside from the CPI the remainder of the week looks to be fairly quiet.

From a technical perspective the gradual improvement of interest rates over the past month may be running out of steam but for now we’ll try to remain on track.  I will continue to float but with a more cautious outlook.

Current Outlook: floating

Mortgage Rate Update January 12, 2017

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

Although mortgage note rates are unchanged today the accompanying closing costs are modestly lower so in fact the rate environment has improved slightly this week.

In case you missed it FHA announced Monday that FHA mortgage insurance premiums will be reduced beginning January 27, 2017.  If you ever work with FHA buyers then I would encourage you to read the details HERE.

Improved mortgage rates and lower FHA mortgage insurance premiums should help improve affordability but as we know affordability has eroded significantly in recent years.  Has housing reached an inflection point?  Read about and share your thoughts on the topic HERE.

Beginning in late November and again in mid-December I wrote that I thought the financial markets had overreacted to the results of the election.  It took longer than I hoped but it finally looks like the markets are reversing course.  I do not expect mortgage rates to drop to levels seen prior to the election but they have improved by .125%-.25% over the past couple weeks.  Let’s be thankful for that.

From a technical perspective momentum is on our side so I will maintain a floating position.  That said, if you have been floating for the past couple weeks it may not be a bad plan to lock in and take your profits off the table.

Current Outlook: floating

Mortgage Rate Update January 9, 2017

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

Mortgage rates are effectively unchanged from last week.

As I’ve written countless times on this feed there is a common misunderstanding about the relationship between the Federal Reserve and mortgage rates.  The Fed does not directly control mortgage rates.

The most recent Fed hike, which took place on December 16th, is yet another example.  Since December 16th the yield on the US 10-year treasury note has improved as have mortgage rates (feel free to knock on wood as you read this).

Why?  It’s important to remember that when the Fed hikes short-term interest rates it is with the intention of curbing inflationary pressure.  Since inflation eats away at the profits for lenders Fed rate hikes can actually encourage improvements in longer-term interest rates.

The all-important jobs report that was released on Friday showed disappointing results for the number of new jobs created in December.  Normally this would be positive news for mortgage rates since bad news for the economy tends to be good news for interest rates.

However, the report also showed higher than expected wage growth.  Since last year average wages increased by nearly 3% which was above expectations.  Wage pressure can lead to inflation which we know is not a positive factor for mortgage rates.

This week’s economic calendar is fairly light until Friday.  On Friday we’ll get the latest readings for retail sales, the Producer Price Index, and the Consumer Price Index.

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 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 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