Author: Editor - Finance Top Stories

Worst 2 Days For Rates Since June

Mortgage rates continued higher at a reasonably abrupt pace today as last week’s themes have been completely reversed.  What themes are those?  Generally speaking, markets were undergoing a risk-aversion trade given the rising geopolitical tension surrounding North Korea and the economic uncertainty associated with back-to-back hurricanes.   Risk aversion tends to take the form of investors seeking safer haven assets like bonds at the expense of higher growth potential assets like stocks.  Indeed, stocks had stumbled sideways to slightly lower last week while bond prices rose (higher bond prices = lower rates).  Now that dynamic is reversing with stocks breaking to new all-time highs while bond prices move lower (lower bond prices = higher rates). In the bigger picture, the damage is still far from severe.  The best 30yr fixed scenarios are still under 4% for many lenders.  But the past 2 days have constituted the most abrupt move higher in rates since at least late June, 2017.  In this environment, it makes more sense to remain defensive in terms of locking and floating–at least until we find the next solid ceiling for rates. Loan Originator Perspective Bond markets’ regression continued today, on the heels of Monday’s stock rally and potential tax reform progress.  Bonds’ losses weren’t overly pronounced, but it feels like we’re teetering towards further regression.  My loans closing within 30 days are locked, don’t see a large short...

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Mortgage Rates Jolted Higher, Relatively

Mortgage rates finally had a bad day, but everything’s relative.  This sort of bad day leaves the average lender quoting rates that would have been the best of 2017 any other time before last week.  It’s only when compared to last week that we’d consider them to be moderately higher.   How much higher are we talking about?  Let’s put it this way: most borrowers will still be quoted the same interest rates seen on Friday with the weakness being seen in the form of slightly higher upfront costs.  In the worst cases, the cost change could be just over 0.3% of the loan amount, or $300 for every $100,000 borrowed.  The alternative would be to move up an eighth of a point in rate and pay lower upfront costs (or potentially get a lender credit, depending on the scenario). As far as the motivation for the mini rate spike, credit goes primarily to an absence of North Korea-related drama over the weekend as well as Hurricane Irma failing to live up to its most dire potential.  Both of those events had markets on edge, putting money into bond markets (which pushes rates lower) and holding back investing in stocks.  Today was a reversal of those themes with a big stock rally that brought major averages to near-record levels.   As to whether or not this is the beginning of...

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More New 2017 Lows For Mortgage Rates

Mortgage rates were slightly lower today, despite moderate weakness in underlying bond markets.  This would typically coincide with higher rates, but mortgage lenders haven’t been moving in lock-step with markets amid this week’s higher volatility. The first dose of volatility came early, with weekend headlines concerning North Korea resulting in a nice move lower to start the week.  Rates bounced on Wednesday on news of a bipartisan agreement to provide disaster relief and to temporarily raise the debt ceiling.  The latter had been causing general economic concern–something that tends to benefit rates.  Thursday brought the European Central Bank announcement which was beneficial for global bond markets because the ECB isn’t in a rush to pull the plug on its accommodative efforts (translation: “stuff that helps rates stay low”).  After all of that, today ended up being rather superfluous in the bigger picture.  The fact that the nation is bracing for the ill effects of Hurricane Irma only decreased the focus on market-related events. Bottom line: rates still hadn’t caught up to yesterday’s market improvements and were thus able to move just a bit lower today, despite bond market weakness.   Loan Originator Perspective Bond markets continued their slow descent to lower rates today, and my pricing improved around 20 bps on most loans,  There was scant economic data, but a prominent Fed member referenced US growth challenges.  While rates haven’t plummeted...

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Mortgage Rates Little-Changed at 2017 Lows

Mortgage rates didn’t move much today, despite plenty of strength in underlying bond markets.  This would normally coincide with lower rates, so what’s the deal?   The main issue is timing.  Bond markets weakened yesterday afternoon.  This would imply higher rates, but most lenders never went to the trouble of adjusting rate sheets intraday.  As I said yesterday, those lenders would begin today at a disadvantage.  Indeed they did, and that disadvantage was generally erased by the improvement in bond markets.  Thus, lenders who didn’t move rates higher yesterday were able to keep today’s rates relatively unchanged, thanks to bond market gains.  Lenders who DID raise rates yesterday were able to offer slightly lower rates today. All in all, the average lender is quoting the lowest rates of 2017, with more than a few lenders  at 3.75% on a top tier conventional 30yr fixed scenario.  Most lenders are able to quote 3.875% now, though a few remain at 4.0%. Loan Originator Perspective Bond markets dodged a bullet today, as the ECB’s policy statement and Chairman Draghi’s press conference failed to ignite fears of imminent ECB bond tapering.  By early PM, we regained yesterday’s losses, and (for now) the slow trend to lower rates may be intact.  It’s certainly tempting to float loans closing more than 30 days out.  For those floating and within 30 days of closing, I’d wait until late...

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Mortgage Rates Lower, but Under Some Pressure

Mortgage rates moved lower this morning, more by way of catching up with yesterday’s market movement than anything.  Specifically, bond markets (which underlie interest rates) were very little changed this morning.   Because mortgage lenders hadn’t fully adjusted yesterday’s rate sheets to reflect yesterday’s strong move in bond markets, rates had a bit farther to fall.  As such, most lenders began the day with the best rate sheet offerings of the year. Quite a few lenders ended the day at the best levels of the year as well, but more than a few made negative adjustments in the afternoon due to market volatility.  At issue was an announcement that lawmakers were coming together to pass a disaster relief bill that included a temporary increase of the debt ceiling, thus allowing government operations to continue through December.  Given that political dysfunction is one of the factors helping rates stay low in 2017, it’s not too surprising to see rates bounce slightly higher with a fresh example of lawmakers actually being able to come up with bipartisan solutions to previously divisive issues. Lenders who did NOT adjust rate sheets higher this afternoon are starting tomorrow at a disadvantage.  In other words, if bonds don’t change much overnight, those lenders are likely to begin the day with slightly higher rates. Loan Originator Perspective News of a probable debt ceiling extension spooked bond markets today,...

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