Author: Editor - Finance Top Stories

Mortgage Rates Hold Steady Despite Fed’s Warning

Mortgage rates were unchanged to slightly lower today, depending on the lender.  Merely holding steady is a victory today.  Reason being: bond markets (which dictate rates) weakened yesterday.  That implied higher rates ahead.  Lenders had the choice to change yesterday’s rate sheets for the worse or to wait until this morning to make the adjustments.  Very few issued reprices yesterday.  In other words, this morning’s rate sheets needed the overnight bond market strength in order to hold steady. Fortunately, that strength was just enough for the average lender to remain in similar shape to yesterday or better.  There were a few brief spats of intraday market volatility, but none were sufficient to prompt any rate changes from mortgage lenders.   The Fed released the Minutes from its last policy meeting.  These suggested the Fed had a deeper conversation regarding the impact of tax reform than conveyed in the official policy statement.  In general, to whatever extent the Fed feels like it needs to combat a hotter-running economy, it would be more willing to hike rates.  Markets reacted with weakness in shorter-term bonds (because the Fed Funds Rate has the most impact on the shortest-term debt).  The weakness (aka, higher yields on stuff like 2yr Treasury Notes), didn’t translate to the longer-term bonds that dictate mortgage rates. Loan Originator Perspectives Bonds staged a modest rally today, and my pricing improved marginally over...

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Mortgage Rates Begin New Year Under Pressure

Mortgage rates are theoretically supposed to go higher in 2018.  Any upward pressure on economic growth or inflation (courtesy of the tax bill, perhaps?) is bad for rates, all things being equal.  Economic growth increases market returns, forcing rates to move higher in order to keep up.  Inflation erodes the value of bonds that underlie rates, meaning investors want higher rates of return if they’re going to buy into the “fixed income” (aka “bond”) market. To be fair, this has been the expectation for several years now, depending whom you ask, but the inflation bogeyman has yet to materialize.  Additionally, bond market investors haven’t seemed too troubled by the pace of economic growth.  That’s allowed for outright defiance of the average prediction, which has generally called for much higher rates than we’ve actually seen. The first trading day of 2018 asks fans of low rates: “are you sure about that?”  Bond markets weakened somewhat quickly, thus raising the risk that early 2018 would indeed follow-through on the promise that’s been broken time and again when the average 30yr fixed rate has attempted to move up from the 4% level.  All that having been said, it’s still too soon to glean any definitive takeaways about new year market momentum.  All we have now is a warning shot–a reminder of the risks that have supposedly been in place for years. Following this...

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Mortgage Rates Unchanged For 2nd Straight Day

Mortgage rates were unchanged again today, keeping them at the same stronger levels achieved on Wednesday afternoon.  Wednesday’s gains were much-needed as they went a long way toward erasing the damage from a quick spike that took rates to the highest levels in months last week.  The caveat to the back-to-back weeks of volatility is that this is the end of December. Mortgage rates are driven primarily by trading in bond markets, and trading in bond markets becomes exceptionally sparse this time of year.  In market speak, the word is “illiquid.”  Imbalances between buyers and sellers always cause some movement, but illiquidity means that rates move much more than they otherwise would. Thankfully, this week’s illiquidity worked in our favor, and rates returned to the dominant range of the third quarter of 2017.  We could be waiting for the 2nd full week of January before we get a clear sense of how traders are approaching the bond market in 2018. Today’s Most Prevalent Rates 30YR FIXED – 4.0%-4.125% FHA/VA – 3.75%  15 YEAR FIXED – 3.375%-3.5% 5 YEAR ARMS –  2.75 – 3.25% depending on the lender Ongoing Lock/Float Considerations 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.  While rates remain low in absolute terms, they’ve moved higher in a more threatening...

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Mortgage Rates Hold Steady Despite Market Weakness

Mortgage rates were broadly unchanged today, despite negative cues from underlying bond markets.  In other words, the bonds that account for most mortgage rate movement suggested higher rates–at least if you’re comparing today against yesterday’s latest levels. The catch is that yesterday’s mortgage rate sheets weren’t based on the “latest levels.”  Bonds improved all day, and fairly substantially at that!  Lenders offered lower rates in the afternoon, but they only make those adjustments once or twice on any given day (they prefer not to make them at all).  As such, bonds continued to improve after the early afternoon glut of new lender rate sheets.  With all of the above in mind, it’s easier to reconcile today’s seemingly paradoxical strength.  Indeed, current bond market trading levels are right in line with the levels seen during yesterday’s mortgage lender rate sheet changes.  In other words, we’re right where we should be. Loan Originator Perspective While not convincingly holding below 2.42 on the 10 year is slightly concerning, without a convincing move higher in yield on the 10 year, I am advising my clients to cautiously float through the weekend as trading volume will be almost non-existent tomorrow and with Monday being a Holiday. I think locking today unless a move justifies it is almost like giving away 4 days of the time frame of the lock.  –Steve Chizmadia, Loan Advisor, Worldwide Credit Corporation...

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Mortgage Rates Catch a Break After Last Week’s Rout

Mortgage rates had a bad week last week, quickly rising to the highest levels in months.  To make matters more frustrating, there weren’t any clearly-delineated reasons for the rate spike.  Making sense of the movement required a dive into the esoteric conversation about the year-end bond trading environment.  That esoteric conversation is still the only way to make sense of today’s movement, but this time around, the move is in our favor.  What had been an abrupt, inexplicable spike higher last week has now been largely undone by an abrupt, inexplicable move lower today.  Rates were only modestly lower this morning, but as underlying bond markets rallied more aggressively, most lenders issued updated rate sheets this afternoon.  Borrowers who had seen top tier rates move up an eighth of a percentage point (.125%) from 4.0% to 4.125% are once again seeing 4.0% after today’s improvement.  Lenders who didn’t reprice today would likely pass along the gains tomorrow morning, as long as bond markets hold relatively steady. Today’s Most Prevalent Rates 30YR FIXED – 4.0%-4.125% FHA/VA – 3.75%  15 YEAR FIXED – 3.375%-3.5% 5 YEAR ARMS –  2.75 – 3.25% depending on the lender Ongoing Lock/Float Considerations 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.  While rates remain low in absolute terms, they’ve...

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