Tag: Portland mortgage rates

Mortgage Rate Update October 10, 2017

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

The bond markets were closed yesterday in observance of Columbus Day.  According to historians Christopher Columbus was not the first European to sail across the Atlantic Ocean.  Norse Viking Leif Eriksson allegedly reached present day New Foundland, Canada  in 1000 AD.

If you are an observer of the stock market then you know that this is not the first time that the S&P 500 has reached 30 as measured by its cyclically adjusted price earnings ratio (CAPE).  The concern is the last two times it sailed to these heights was 1929 and 1999 and we all know how that ended.

The Economist Magazine ran a great piece over the weekend (see HERE) addressing asset prices.  It provides explanations for why the CAPE is at lofty levels and why it may not translate into a crash.  However, in the same article they provide reasons for why interest rates may rise.  The main culprit?  As I have written repeatedly on this blog it is expected to be the Fed unwinding its balance sheet.

Speaking of the Fed the financial markets are currently pricing in a 90% probability that they will hike short-term interest rates in December.

Last week’s jobs report was a stinker.  The US economy shaved 33,000 jobs during the month of September but investors are ignoring the results because of the hurricanes.

The highlights for the economic calendar this week include the producer price index on Wednesday and retail sales/ consumer price index on Thursday.  Momentum is not on our side so I will maintain a locking bias.

Current Outlook: locking

Mortgage Rate Update October 2, 2017

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

It is with a heavy heart that we acknowledge the horrible shootings in Las Vegas this morning.  It is my hope that our leaders can act in a meaningful manner to prevent these events in the future.  That is the greatest honor we can pay the victims.

Mortgage rates were mostly steady last week.  Mortgage note rates are unchanged but the underlying pricing worsened meaning consumers are having to pay modestly higher closing costs at these rates.

Given the shootings in Las Vegas investors are feeling understandably cautious.  Also fueling this sentiment is a non-legally binding vote in Spain.  Voters in the Catalonia region have voted overwhelming to secede from Spain.  The Spanish Federal Government is not required to accept the results.  Uncertainty tends to help US interest rates remain low.

Working in the opposite direction is the GOP tax plan.  As the tax legislation currently stands over $1 trillion would be added to the US deficit in the next decade.  Higher US deficits “crowd-out” non-governmental borrowers (including homebuyers) and causes rates to move higher.

It is the first week of a new month which means the all-important jobs report is due out on Friday.  Market expectations are only for 95,000 new jobs as the recent hurricanes are expected to have taken a toll on new hiring.

I think mortgage rates have a greater likelihood of increasing from current levels than decreasing so recommend a locking bias.

Current Outlook: locking

Mortgage Rate Update September 25, 2017

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

We are officially in Autumn as of Friday when the Earth’s equator passed through the center of the Sun’s disk.  On an equinox the duration of the day and night are approximately equal all over the globe.  Although the season will be turning to fall I don’t anticipate mortgage rates to fall drastically anytime soon.

Although this leaf is soon to fall I don’t expect mortgage rates to follow suit.

In case you missed it the Fed did follow through last week and announce plans to unwind their ~$4.5 trillion balance sheet.  According to the announcement the Fed is expected to reduce the size of their balance sheet on a monthly basis at a pace which will take approximately 7 years to completely liquidate (although they are not likely take the program that far).  This pace is mostly in line with expectations and therefore mortgage rates did not react in a significant manner to the speech.

As I have written repeatedly I believe mortgage rates are far more likely to increase from these levels than they are to decrease given the aforementioned information.

Presently, geopolitical events are preventing US mortgage rates from increasing.  Preliminary German election results show established parties, including Chancellor Angela Merkel’s, receiving the lowest share of the overall vote in the post-World War II era.  Not surprisingly extreme-right populist parties are faring better than expected.

US-North Korean tensions continue to encourage a “flight-to-safety” trade which US interest rates benefit from.

This week the economic calendar is full of fresh housing data.  I will shift to a neutral position in the near-term but favor a locking bias long-term.

Current Outlook: neutral

A few ideas worth sharing for September 21, 2017

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

In this week’s edition of a few ideas worth sharing (which you can access HERE) I share two articles about real estate business models that I expect to thrive as home prices continue to rise.  Also, if you are a fine art fan I would encourage you to read about Heather Day’s latest installation located at the Facebook headquarters.  The future of art is blank to the naked eye!

Mortgage Rate Update September 18, 2017

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

This week in 1973 Billie Jean King defeated former number 1 ranked Bobby Riggs in a tennis match which was publicized as the “Battle of the Sexes”.  Over 50 million television viewers watched the event.  The prior year King was the first woman to be named “Sportsperson of the Year” by Sports Illustrated.

This week the first woman to chair the Federal Reserve will deliver a very important speech following a regularly scheduled monetary policy meeting.  As I’ve written many times the Fed is about to embark on an unwinding of the monetary stimulus they injected into the economy in the wake of the financial crisis.

The Fed is currently in uncharted territory and analysts disagree over the impact of such a move.  Mechanically the Fed will simply allow bonds on their balance sheet to mature without replacing them.

Even without expanding their balance sheet the Fed has remained the highest volume buyer since quantitative easing ended.  The concern is that when the Fed withdraws their level of demand from the market interest rates will have to increase in order to attract buyers.  The degree by which interest rates rise is a matter of debate.

What all parties do agree on is that mortgage rates are very unlikely to improve from these levels as a result of this development.

We shifted to a locking bias two weeks ago and that move has paid off.  I will remain in a locking stance.

Current Outlook: locking

Mortgage Rate Update September 5, 2017

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

According to the calendar summer has passed.  From a meteorological perspective autumn began on September 1st in the Northern Hemisphere.  However, judging from the temperatures outside it feels like summer remains here in Portland.

What also remains are low interest rates.  Mortgage rates improved modestly last week  and are firmly at 2017 lows.

As I wrote about last Monday (HERE) the US 10-year treasury note has successfully closed below the important technical level of 2.18% (currently at 2.08%).  The last time interest rates were this attractive was during the days following the election in November 2016.

Last week two economic reports in particular helped mortgage rates improve.  First, lower than expected inflation data from the Commerce Department called into question the Fed’s plans for continued tightening.  According to CME Group there is only a 36% probability that the Fed will hike short-term interest rates again this year.  Previously the probability had been greater than 50%.

Second, Friday’s all-important jobs report showed weaker than expected job creation for the month of August.  Bad news for the economy is often good news for mortgage rates.

Also contributing to low interest rates is a “flight to safety” in the financial markets.  Investors are reacting to news out of North Korea that a nuclear firearm was successfully tested over the weekend and that further tests are planned for the coming days.  Anytime geopolitical tension rises interest rates tend to improve.

This week’s economic calendar is relatively light.  I expect sentiment regarding the North Korean missile situation will drive action in the financial markets.  If tension wanes we could see interest rates worsen and vice versa.

Current Outlook: floating

Mortgage Rate Update August 28, 2017

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

Housekeeping: ‘Rate update’ will be taking a break from laboring one week from today.  In honor of Labor Day here is a quote from Robert Orben: “every day I get up and look through the Forbes list of the richest people in America. If I’m not there, I go to work.”

My thoughts and prayers go out to all those affected by the devastating impact of Hurricane Harvey.  I wish those who lie in the storm’s wake a safe next few days and rapid recovery.

This week appears to be a pivotal one in terms of the direction of mortgage rates.  Since the beginning of July interest rates have improved and mortgage rates are currently at the best levels of the year.

However, the yield on the US 10-year treasury note has idled at the 2.18% level over the past week.  Given the amount of significant economic data due out this week I think interest rates will make a decisive move higher or lower in the coming days.

On Tuesday we’ll get the latest reading of the Case Shiller Home Price Index report.  On Thursday we’ll get a reading on personal income and pending home sales.  Finally, on Friday we’ll get the all-important jobs report, manufacturing activity, and consumer sentiment.

For now I will maintain a floating position but have grown concerned that this trend lower has run out of steam.

Current Outlook: floating

Mortgage Rate Update May 15, 2017

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

On this day in 1800 President John Adams ordered the Federal Government to pack up and leave Philadelphia and move operations to its new home in Washington DC.  At the time the Federal Government had 125 employees and the transition took one month.  Two hundred and seventeen years later there are now more people employed by the government than in the manufacturing sector.

Speaking of politics I never thought happenings within the FBI would impact mortgage rates.  Last week’s controversial firing of James Comey may be helping US interest rates improve.  Why?  The politically unpopular firing of the former FBI director may encourage those in congress to oppose the President’s proposals on tax reform and infrastructure spending which were generally deemed to be favorable for the stock market and therefore unfavorable for interest rates.

The US yield curve is flattening.  The spread between the yield on the US 2-year & 10-year note is now at the lowest level since the election.

This is a signal that the financial markets are less optimistic about the long-term outlook for economic growth.  This is also a result of the fact that the Fed continues on a path to hike short-term interest rates.  The Fed next meets on June 13th-14th.

From a technical perspective interest rates are in a favorable range.  Momentum is on our side but oil prices are moving higher this morning so we’ll want to keep an eye on that market (energy prices are highly correlated to inflation).

Current Outlook: neutral

Mortgage Rate Update May 8, 2017

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

Last week we switched to a locking bias and indeed mortgage rates did worsen very modestly.  Rates were pressured higher on Wednesday last week after the Fed labeled weak 1st quarter economic activity as “transitory”.

Friday’s all-important jobs report showed that 194,000 new jobs were created during April and the US unemployment rate fell to a decade low of 4.4%.  Good news for the economy tends to be bad news for mortgage rates.

As you’ve probably heard France elected 38 year old Emmanuel Macron to be their new president yesterday.  He defeated far right candidate Marine Le Pen.  The financial markets are shrugging their shoulders today as it was widely expected.

Congratulations to the people of France who elected the youngest president in their history. The election has not had an impact on mortgage rates thus far.

The Wall Street Journal ran THIS PIECE over the weekend in which they highlight the fact that interest rates are vulnerable to a sharp increase if the Trump administration tax cut plan converges with the Fed’s unwinding of their balance sheet.  Should President Trump get his tax cut plan through congress the federal deficit would likely grow beyond the current forecast of $1 trillion by 2023.  This coupled with the Fed increasing the supply of bonds on the open market would almost surely drive long-term yields higher.  This is a threat we will have to monitor throughout the summer.

In the meantime mortgage rates remain at very attractive levels.  This week’s economic calendar is fairly light.  The highlights come on Thursday & Friday when we get the Producer Price Index and Consumer Price Index.

The technical outlook for interest rates looks favorable so I am going to recommend a floating bias this week.

Current Outlook: locking bias

Mortgage Rate Update May 1, 2017

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

Happy May Day!  A short history lesson: The earliest accounts of May Day celebrations, meant to celebrate the birth of Spring, dates back the Roman Republic era.  However, in the late 19th century Socialist & Communist groups adopted May 1st to be International Workers’ Day in honor of lives that were lost during an attack on striking workers.

Speaking of working this is the first week of a new month and therefore we have the all-important jobs report due out Friday.  In fact, the economic calendar is packed with significant events this week.

Starting tomorrow the Fed will conduct their regularly scheduled two-day monetary policy meeting.  According to CME group there is only a ~5% chance that the Fed will hike short-term interest rates at this meeting.  However, the markets think there is a 63% chance they will hike at the next meeting scheduled for June 13th-14th.  The Fed does not directly control mortgage rates but their comments and actions can influence them.  On Friday five Fed members are scheduled to speak and we’ll get the results of the aforementioned jobs report.  I expect to see volatility at the end of the week.

From a technical perspective we are keeping a watchful eye on the yield of the US 10-year treasury note.  This morning it broke above 2.31% which was a solid level of resistance.

Should the yield on the US 10-year treasury note close above 2.31% tonight then I think it is likely it will increase all the way to ~2.39% and mortgage rates will likely increase by .125%.  For this reason I am going to recommend a locking bias.

Current Outlook: locking bias