Author: Editor - Finance Top Stories

Mortgage Rates Still Holding Near Recent Highs

Mortgage rates were very slightly lower today, but not by enough to have an impact on the actual interest rates being quoted.  Specifically, the “effective rate”–which factors upfront costs into an overall cost of financing is slightly lower due to changes in those upfront costs.  But borrowers will be seeing the same interest rate at the top of the page on today’s loan quotes compared to yesterday.  In the bigger picture, rates are merely hovering around the highest levels in more than 2 months.  Just 3 and a half weeks ago, they were at the best levels in more than 10 months.  As dramatic as that sounds, the average top-tier conventional 30yr fixed rate quote has only moved an eighth of a percent higher during that time.  The bigger concern would be a move higher from here.  Both Treasury yields and mortgage rates have leveled off at a ceiling, of sorts.  Breaking above that ceiling could signify more upward momentum heading into the end of the year. Until that risk can be ruled out, locking continues to make more sense than floating.  To quantify that, if 10yr yields are in the low 2.3’s today, we wouldn’t even begin to entertain a shift in the broader negative trend until 10yr yields hit the low-to-mid 2.2’s. Loan Originator Perspective Rates continued ascending upward today, as we approached the lowest MBS prices since mid...

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Mortgage Rates Roughly Unchanged Near Recent Highs

Mortgage rates were unchanged today, on average, marking the second straight day with minimal change near the highest levels in more than 2 months.   For most lenders, that means conventional 30yr fixed rate quotes near 4.0% on top tier scenarios.  So far this week, day-to-day changes have been limited to the upfront closing cost side of the equation (as opposed to interest rates themselves).  While this can have a slight impact on the overall cost of financing, it doesn’t change the “note rate” attached to a new mortgage. Underlying financial markets have been fairly calm for the past 2 days despite successive all-time highs in stocks.  The economic data and events that motivate bond markets (which dictate mortgage rates) have been absent, but that’s set to change heading into the 2nd half of the week. With the economic data comes an increase in potential volatility.  Rates have risen enough since early September that some market participants are hoping they’ll find a ceiling soon, but we haven’t seen enough evidence for that to abandon a defensive stance just yet.  Locking continues to make more sense than floating until bond markets improve more meaningfully.  To quantify that, if 10yr yields are in the low 2.3’s today, we wouldn’t even begin to entertain a shift in the broader negative trend until 10yr yields hit the low-to-mid 2.2’s. Loan Originator Perspective Bond markets were flat...

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Mortgage Rates Mixed, but Higher on Average

Mortgage rates were lower today for a few lenders, but higher for most others, dragging the average 0.01% higher in terms of effective rates.  Note rates (which don’t factor in the upfront costs associated with a loan quote), on the other hand, haven’t changed much in recent days, with 4.0% being the most prevalent for top tier 30yr fixed scenarios.   Momentum has generally been negative for rates since the weekend of Hurricane Irma.  Markets had priced in quite a bit of risk at the time (typically involves stock prices and rates moving lower), not only due to the Hurricane, but also North Korea-related uncertainty.  When Irma proved to be slightly less catastrophic than forecast, and when the weekend passed without a major nuclear test from North Korea, financial markets embarked on a correction that pulled rates and stock prices higher.   Just when that correction looked to be leveling off, rates lurched higher again last week due to a combination of factors including the release of the Trump tax plan.  With that, rates are back in line with levels not seen since July.  Any meaningful weakness from here would leave rates in the worst shape since March.  With all of the above in mind, a defensive lock strategy continues to be in order. Loan Originator Perspective Bond markets were largely flat today, despite hotter than expected ISM data this AM. Sadly, “flat”...

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Mortgage Rates Back Down From 2-Month Highs

Mortgage rates moved lower today, even though underlying bond markets (which ultimately drive rates) suggested a move higher.  This happens from time to time and it’s usually a factor of timing.  Today is no different.  Bond markets were improving throughout the day yesterday, but started out at much weaker levels.  Bond market weakness is associated with higher rates.  As such, yesterday’s rates were the highest we’d seen in roughly 2 months.  As bonds improved throughout the day, many lenders abstained when it arguably became time to release friendlier rate sheets.  When that happens, lenders become more likely to pass along the market gains the following morning–assuming the market gains make it through the night.  That was the case today, and it allowed lenders to put rates back in line with the second-best levels of the week.  Is that much movement?  No, not at all.  In fact, most borrowers probably won’t notice much of a change on loan quotes outside the upfront costs.  The actual interest rate being quoted should be the same as yesterday. Loan Originator Perspective Bonds sold off today, worsening pricing, despite weak inflation data released this morning.  It appear bond traders are sipping giant gulps of tax-reform/economic growth kool-aid, despite the uncertainty of actual passage and the final details.  In any case, have to play defense here, locking early is still the call.  Float at your own risk.  –Ted...

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Mortgage Rates Trying to Find a Ceiling

Mortgage rates were decidedly higher this morning, with most lenders back above last week’s highs.  At the time, those were the highest rates in more than a month, although the range has been relatively narrow.  Underlying bond markets improved throughout the day, however, resulting in a fair amount of lenders revising rate sheets for the better.  After those revisions, rates are pretty close to yesterday’s levels. One thing’s for sure: the average lender is still definitively higher compared to last Friday’s rates.  Keep that in mind if you encounter one of the many news stories citing “unchanged” week-over-week rates from Freddie Mac’s Survey (which, as you may have guessed, can run a bit behind more up-to-the-minute changes). From a strategy standpoint, today’s resilience is a welcome sight, but the safest bet is to remain defensive until we see more evidence of a bounce.  For now, the trend remains negative and today was an exception. Loan Originator Perspective Bonds caught a bit of a month-end/dead cat bounce today, wandering between slight losses and gains.  Many lenders repriced better mid-day, but at best pricing mirrored Wednesday’s.  I still think markets are giving tax reform’s growth potential far too much credence, but clearly my opinion doesn’t matter.  Until I see an uptrend, I’d going defensive, and locking loans early in the process.  –Ted Rood, Senior Originator Today’s Most Prevalent Rates 30YR FIXED – 3.875-4.0%...

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