Tag: Rate Update

Markets expecting more interest rate volatilty

Posted on by Evan in Economics & Interest Rates, General Mortgage Info.

According to this article featured in the Economist magazine back at the beginning of July the markets are currently less certain about the future prospects of long-term interest rates (i.e. mortgage rates).

The chart to the left shows that the “implied volatility” in the interest rate market has increased rather significantly since the beginning of the year.

What does this mean for mortgage rates?

First, it means that predicting mortgage rates accurately will likely be difficult in the coming weeks.

Second, it means that we may see wild swings in mortgage rates.  Instead of gradual increases and decreases over time that we’re accustomed to we might see more severe adjustments in shorter periods of time.

As always, if you’re happy with the fact that your interest rate is at a historically low level and your payments are comfortable it is probably a good idea to go ahead and lock in your rate to protect yourself.

Rate Update July 10, 2009

Posted on by Evan in Rate Update


Overall mortgage rates are essentially unchanged this morning.

Although mortgage-backed bond prices declined yesterday afternoon threatening to push mortgage rates higher; they have rallied this morning on weaker than expected consumer confidence figures.

Early on in 2nd-quarter earnings season there hasn’t been too many surprises.  The bulk of reports will begin to roll out next week and we still believe this is the most important story to follow.  We’ll keep you posted.

Current Outlook: bias towards locking

Rate Update July 8, 2009

Posted on by Evan in Rate Update

Mortgage rates are unchanged this morning.

Since Wednesday of last week 30-year fixed rates have dropped by .375% as investors have shifted investment dollars away from equities and into “safer” bond investments (in that time both the S & P 500 and Dow Jones Industrial Average have also dropped).  The shift away from risk was prompted by last Thursday’s poor employment report.

As we reported in Monday’s rate update the second quarter earnings season kicks off today.  The overall health of earnings report will likely dictate the direction of mortgage rates for the next few weeks.  If reports are perceived to be better than expectations mortgage rates will increase and vice-versa.

That said, what are investors looking for?  In my opinion it comes down to the financial industry.  I believe that investors are already expecting the worst out of commodity, retail, and industrial stocks.  However, if financial stocks beat expectations then the market may be left thinking that the industry which drug us into the recession could be the same that leads us out.

Because of the uncertainty surrounding earnings reports we will remain in a neutral position.  The safe play is to lock in rates today since we are .375% better off from last week.

Current Outlook: neutral

Rate Update July 7, 2009

Posted on by Evan in Rate Update

Mortgage rates are unchanged this morning.

As traders and investors await the 2nd quarter earnings season that kicks off tomorrow afternoon we don’t expect there to be a catalyst that would help mortgage rates move any lower.

Beginning tomorrow we’ll need to keep a close eye on the stock market for clues on how mortgage rates will move (click this link to understand how stocks impact mortgage rates).  Although different analysts have different opinions it seems as though the financial sector will have an especially important role in shaping expectations for the overall market.  If financial stocks report better than expected earnings then we would expect mortgage rates to suffer and vice-versa.

Working against mortgage rates are two factors.  First, there is more and more talk about the need for another round of government stimulus.  Given that the US Government is already working with record budget deficits another round of stimulus would further escalate inflationary fears and push mortgage rates higher.

Furthermore, the technical trading picture for mortgage backed bonds does not look favorable.  For now we’re going to pull back to a neutral position.

Current Outlook: neutral

Rate Update July 6, 2009

Posted on by Evan in Rate Update

Mortgage rates are essentially unchanged this morning despite an economic storyline that would typically help rates move lower.

Equity markets around the world traded lower today as investors pull back on stocks ahead of earnings season which kicks off on Wednesday.  The US Dollar is trading higher against foreign currencies and oil prices are lower.  This inflation-easing news has yet to help mortgage rates because of technical trading patterns.

We’ll keep a close eye on the market over the next couple days to see if bond prices can break through the 50-day moving average.  If they can, expect lower mortgage rates later in the week.  However, we’re taking a risk because it’s also very possible for bond prices to bounce lower here which would push rates higher.

Current Outlook: Cautiously floating

Rate Update July 2, 2009

Posted on by Evan in Rate Update

In yesterday’s ‘rate update’ we recommended floating rates into today’s jobs report and fortunately our advice paid off. Both fixed rates and ARMs are down significantly this morning. FHA rates remain unchanged.

Analysts’ expectations were for 363,000 jobs lost last month. The report issued this morning showed that the economy lost over 100,000 more than this. The unemployment rate in the US now stands at 9.5%, the highest level since 1983.

Bad news for the economy is typically good news for mortgage rates and we’re seeing that this morning. For a more complete explanation on how the monthly jobs report impacts mortgage rates please refer to this link.

For now, technical trading patterns do not look favorable for interest rates. We are going to continue to float to see if rates can push lower but we need to be cautious because in today’s markets volatility can erase gains quickly.

Current Outlook: Cautiously floating

Rate Update July 1, 2009

Posted on by Evan in Rate Update

Mortgage rates are unchanged from yesterday and are expected to remain here until tomorrow’s monthly jobs report.  Click this link to learn why the jobs report is such an important economic report for mortgage rates.

Given the current condition of the economy it’s expected that tomorrow’s jobs report will be ugly which would ordinarily help mortgage rates move lower.  However, these are not ordinary times.  Because analysts are expecting the jobs report to be poor (the market currently expects jobs losses of 363,000), even a modest sign of hope could push rates higher.

Given yesterday’s increase in fixed rates we feel comfortable floating rates into the report tomorrow.

Current Outlook: Floating into tomorrow’s jobs report

Rate Update June 30, 2009

Posted on by Evan in Rate Update

Fixed rates are slightly higher this morning due to positive news regarding the housing market as well as technical trading patterns.

This morning’s S & P Case-Shiller report shows that although home prices declined in all of the 20 urban markets it covers, the annualized decline was less than previous reports (for an explanation as to why this particular report is thought to be more accurate than other real estate reports watch the first 3:00 minutes of this you tube video I made last year).  Many analysts think this may signal the “bottom of the market”.  As a result, mortgage-backed bonds have retreated this morning.

In addition, technical trading patterns are likely also playing a role as prices traded near resistance yesterday afternoon.

Current Outlook: Locking in the near term

Rate Update June 29, 2009

Posted on by Evan in Rate Update

Link to the “my sabbatical” section of my blog.

Fixed Mortgage Rates are unchanged from Friday.

The Chinese Government made reassuring comments over the weekend regarding their appetite for US debt which is helping mortgage rates this morning.  As you may recall China is one of the largest buyers of US debt.  Recently there has been speculation that they would reduce their demand for US-denominated bonds because of the massive amounts of debt that the US government is amassing in order to stave off economic disaster.  Their comments are assuring investors this morning which is why mortgage-backed bonds are trading modestly higher.

The market is volatile but for now we’ll continue to float mortgage rates.

Current Outlook: Cautiously floating