Tag: Portland mortgage rates

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

Mortgage Rate Update October 13, 2016

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

Mortgage rates have worsened modestly this week.  A look at the yield on the US 10-year treasury shows an increase from ~1.55% in late September to ~1.75% today.  During that time mortgage rates have increased by ~.125%.

portland-mortgage-rates-us-10yr-10-13
This morning interest rates have stabilized and are trying to reverse lower as stocks slide.  US stocks are trading lower on news that Chinese exports declined 10% year-over-year.  Mortgage rates tend to benefit when stocks falter.

In September 2015 the Fed was widely expected to raise short-term interest rates but ended up delaying the action after China released weaker than expected economic data.  Might today’s release cause the Fed to delay again?  At this point I think not but we’ll have to see how the markets respond in the coming weeks.

From a technical perspective the pattern shown in the chart above leads me to believe we could see yields continue to decline.  I am going to recommend a floating stance.

Current Outlook: floating

Mortgage Rate Update October 3, 2016

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

Mortgage note rates are unchanged today but pricing at these levels is modestly worse.

It’s a relatively quiet day in the financial markets.  Earlier today a report was released that showed US manufacturing activity slightly stronger than anticipated.  Good news for the economy tends to be bad news for mortgage rates.

It’s a new month which means a fresh jobs report due out this Friday.  The markets are currently expecting ~170,000 new jobs created.  Last month only ~150,000 new jobs were created but the prior two months showed 200,000+.  In general a strong jobs report will pressure mortgage rates higher and vice versa.

Normally mortgage rates react poorly to a strong jobs report but this month might be different.
Normally mortgage rates react poorly to a strong jobs report but this month might be different.

That said, this month’s jobs report could react differently.  If the jobs number on Friday comes in well below expectations then it will become less likely that the Fed will hike rates this December.  The stock market would likely react positively which would hurt mortgage rates.  If the jobs number comes in stronger than expected then it would likely solidify a fed rate hike in December.  Since rate hikes are anti-inflationary we could see rates improve.

The technical signals do not look favorable so I will maintain a locking bias.

Current Outlook: locking bias

Mortgage Rate Update September 9, 2016

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

Here we go again!  It’s hard to believe summer is over and a new school year has begun.

Mortgage rates are unchanged from my last ‘rate update’ on August 22nd.  They remain very near all-time low levels.

This week’s economic calendar is very light.  I expect mortgage rates to react to dynamics in the stock market and to “Fed speak”.  As a reminder, the Fed does not directly control mortgage rates but their words and comments can create waves in the financial markets and impact the direction of mortgage rates.

The Fed is scheduled to meet on September 20th-21st.  Currently the markets believe there is a 15% chance that the Fed will hike short-term interest rates at this meeting. Friday’s jobs report showed that ~151,000 new jobs were created in August which is slightly softer than the previous couple months making it more likely the Fed will not hike.

Jobs-Report-9-2-2016

As Barry Habib of MBShighway.com perceptively pointed out earlier today, the Fed is unlikely to hike short-term rates at this upcoming meeting because the London Interbank Offered Rate (AKA “LIBOR”) is scheduled to reset on Sept. 29th.  If the Fed hikes short-term rates on the 21st then the LIBOR would likely reset +.25% higher and there are literally billions of dollars of mortgages tied to LIBOR around the world.  I think the Fed will wait until December to hike.

What I am certain of is that you will hear a lot of analysis on this topic over the next two weeks.

Current Outlook: neutral

Mortgage Rate Update August 22, 2016

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

Housekeeping: ‘Rate Update’ will be on vacation for the remainder of August.  Look for the next ‘rate update’ to take place after Labor Day.

Mortgage rates are unchanged from last Thursday.

This week’s economic calendar is relatively light which is fitting given that we are in the “dog days of summer”.  What will be closely watched is the Jackson Hole Symposium.

Every year since 1978 the Federal Reserve Bank of Kansas City has hosted an annual economic policy symposium where central bankers from around the world fly in to focus on various economic topics.  Sounds fun, right?

The most anticipated speech will come Friday when Fed Chairwoman Janet Yellen will speak.  As I wrote about on Thursday the Fed is currently at odds as to whether to hike short-term interest rates now or later.

Scenic Jackson Hole, Wyoming will play host to central bankers from around the globe this week. Fed Chairwoman Janet Yellen is slated to deliver a much anticipated speech this Friday.
Scenic Jackson Hole, Wyoming will play host to central bankers from around the globe this week. Fed Chairwoman Janet Yellen is slated to deliver a much anticipated speech this Friday.

The US economy has shown strong job growth each of the past two months.  Furthermore, inflationary pressure has been picking up especially looking at the Consumer Price Index (CPI) which takes into account housing costs.  One problem with the Fed’s preferred gauge of inflation, called the PCE, is that it does not include housing in its basket of goods.

If Yellen sounds “hawkish” in her comments this Friday it will be interesting to see how the markets react.  Intuitively you might think mortgage rates will suffer if she hints at a rate hike.  However, the Fed does not directly control mortgage rates.  I wouldn’t be surprised to see US stocks falter which could help mortgage rates move modestly lower.

Current Outlook: floating

Mortgage Rate Update August 18, 2016

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

Mortgage rates are unchanged from Monday.

Yesterday minutes from the last Fed meeting were released.  They indicated that a some on the monetary policy committee believes the timing is ripe for another rate hike.  These “hawks” cite a strong labor market and steady economic growth.

Fed "hawks" are pushing Fed "doves" to hike rates again soon.
Fed “hawks” are pushing Fed “doves” to hike rates again soon.

However, the “doves”, those on the committee who are not ready to hike (including Janet Yellen), would like to see more inflationary pressure before they hike.  Market odds believe there is a 50% chance the Fed will hike at one of the next three meetings (September, October, and December).

The remainder of this week’s economic calendar is quiet.  As I wrote about on Monday (see HERE) the technical picture for mortgage-backed bonds (MBS) remains potentially volatile.  For now MBS prices are trading in our favor but that could change quickly so caution is advised.

I am going to switch to a floating position for now.

Current Outlook: floating

Mortgage Rate Update August 8, 2016

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

Mortgage rates are slightly worse as compared to last week.

Friday’s all-important jobs report was stronger than anticipated.  The report showed that +255,000 new jobs were created during the month of July and they revised higher the previously released number for June to +292,000.  Good news for the employment market tends to be bad news for interest rates.

A second consecutive month of strong jobs gains makes it more likely that the Fed will hike rates again at an upcoming meeting.  I personally don’t see them hiking rates prior to the election but won’t be surprised if they do so at the December meeting.  The Fed does not directly control mortgage rates but their words and actions do reverberate across the financial landscape.

The economic calendar for this week is light as compared to last week.  As a result, I expect mortgage rates to react to technical signals and the stock market.  Speaking of the stock market, don’t look now but eh S&P 500 is trading at all-time highs.

portland mortgage broker SP500

After trading within a narrow range of 2,106-2,175 for three weeks Friday’s jobs report provided catalyst for the index to break higher.  Should stocks break higher it would be a bad sign for mortgage rates.  If the S&P 500 is sucked back below 2,175 then I’ll be a little more optimistic about mortgage rates.

Current Outlook: locking bias

Mortgage Rate Update July 25, 2016

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

Mortgage rates are basically even with the latter half of last week and .125% off all-time low levels.

The Fed will meet for its normal two day monetary policy meeting starting tomorrow with a policy statement released on Wednesday.  There is basically zero chance the Fed will hike rates at this meeting but their comments always have the ability to move the markets.  The markets currently are pricing in a ~20% probability for a hike at the September meeting and ~50% for the December meeting.

The rest of the economic calendar is fairly light.  We will get the latest version of the Case-Shiller Home Price index tomorrow.  Portland has led the nation for annual home price appreciation for the past eight months.

Corporate Earnings

We are also in the middle of earnings season and this week Apple, Boeing, and Caterpillar are slated to report.  Although the domestic economy is faring well analysts will be watching for signs of how global headwinds may be impacting corporate profits.

I will maintain a floating position for now.

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 26, 2016

Posted on by Evan in Rate Update

Mortgage rates are basically unchanged from the beginning of the week.

With regard to interest rates nothing major to report thus far in the week.  The media continues to speculate that the Fed will raise short-term interest rates in June but I don’t expect they will unless the June 3rd jobs report is very strong.

One interesting item to watch is the difference between shorter duration interest rates and longer-term rates.  Below is a chart showing that the yield on the US 2-year treasury and 10-year treasury notes have been converging (the spread is tightening).

portland or mortgage rates treas spread
Source: Wall Street Journal

Traditionally this has been an early indicator of an upcoming economic slowdown.  This signal is not 100% accurate but it is something to keep an eye on.  Keep in mind that bad news for the economy tends to be good news for mortgage rates.

I don’t see a catalyst for mortgage rates to worsen so I am going to recommend floating over the weekend.

Current Outlook: neutral