Author: Editor - Finance Top Stories

Mortgage Rates Stabilize Ahead of Next Week’s Big Fed Announcement

Mortgage rates were steady to slightly lower on average today, confirming the end of a somewhat abrupt correction from last week’s 2017 lows.  In other words, rates rose quickly during the first days of the week and spent the last 3 days leveling off.  To put “abrupt” in context and reiterate yesterday’s thoughts, the worst case scenario would be an eighth of a percentage point higher in rate from last week.  That’s $14/month on a $200k loan.  We’ve certainly seen worse weeks day, but only 2 of them were in 2017. The flat momentum at the end of this week isn’t too likely to stick around next week.  The Fed will (probably) make a landmark announcement that confirms the start of its balance sheet reduction efforts.  This means slightly less bond-buying each month, and could put upward pressure on rates.  Financial markets are widely expecting that, however, and the Fed has already fully mapped out its game-plan for the program.  So the bigger impact to rates would come from any updates to the Fed’s forecasts or the verbiage in the policy statement. With the most recent major development for mortgage rates being a bounce at the lowest levels of the year, it makes more sense to stay on guard against upward pressure until and unless we see renewed momentum toward lower rates. Loan Originator Perspective Another non-descript day in bond markets...

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Mortgage Rates at 3-Week Highs

Mortgage rates moved higher today, despite resilience in underlying bond markets.  If you were to ask bonds, they’d vote for rates remaining flat–well, sort of.  There is a timing issue that I brought to your attention yesterday where mortgage lenders had yet to adjust for yesterday afternoon’s bond market weakness (weaker bonds = higher rates) and were thus more likely to start today with higher rates, all other things being equal. That’s exactly what happened.  And while it does mean that rates are higher than they were yesterday, we’re actually seeing some supportive cues in bond market for the first time all week.  Specifically, bonds have held fairly steady today–something they’ve had a hard time with recently.  It’s early to say for sure, but this could be the first sign that this week’s corrective uptrend in rates is running out of steam. All told, that correction resulted in most lenders moving up an eighth of a percentage point (.125%) in rate.  The average top tier conventional 30yr fixed quote is hovering somewhere between 3.875% and 4.0%.   Loan Originator Perspective Bond markets were open today, but it was tough to tell as prices were virtually flat.  This morning’s “warm” inflation data failed to motivate sellers to the extent it typically would have.  My pricing is down slightly from yesterday’s.  Glad the losses have slowed, but not sure we’re poised for gains...

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Mortgage Rates Stabilize Despite More Bond Market Weakness

Mortgage rates held steady today, and were slightly lower in some cases.  That’s not entirely logical at first glance because the bonds that dictate mortgage rates suggested the opposite.  Considering a 2-day time frame helps us reconcile this paradox.  Bonds had improved by the end of the day yesterday, albeit slightly.  Lenders, however, didn’t account for that improvement by changing rates yesterday.  Instead, they made their adjustments with this morning’s rate sheets.  Bonds were unchanged to slightly stronger this morning.  Today’s weakness arrived after most lenders already had rate sheets out for the day. Applying the same logic discussed above, we could reasonably expect tomorrow morning’s rates to be slightly higher, unless bond markets happen to improve significantly overnight or early tomorrow morning.  Either way, there’s potential for volatility following the Consumer Price Index report at 8:30am.  This is the most important data on inflation at the moment, and inflation is currently an important consideration for Fed policy (which, in turn, is one of the key considerations for rates!). Risk-averse borrowers and originators see today as a good lock opportunity amidst the general move toward higher rates this week. Loan Originator Perspective Bond markets idled in place today, with minor losses by mid PM.  My pricing was virtually identical to yesterday’s.  We’re now squarely back in recent ranges, with treasury yields at 2.19.  Tomorrow we get Core CPI (inflation) data; it’s...

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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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