Author: Editor - Finance Top Stories

Mortgage Rates Unchanged to Slightly Higher

Mortgage rates were slightly higher today, on average, as bond markets backed away from their stronger levels seen during the last 2 days of October.  “Strength” in bond markets connotes higher prices for bonds and lower interest rates.  In actuality, the bonds that dictate mortgage rates are fairly close to yesterday’s levels.  Additionally, some lenders are offering mortgage rates that are fairly close to yesterday’s, but the median lender is a bit worse off due to weaker bond market conditions earlier this morning (bonds improved during the day, but not every lender changed rate sheets accordingly). The Fed statement came out this afternoon, but it didn’t contain any major revelations that affected rates.  Based on the trajectory in markets, it looks like some investors thought the Fed might be a little more downbeat on inflation and the rate hike outlook.  In that regard, the relatively unchanged verbiage of the announcement put an end to the day’s bond market rally (and the prospects for more lenders to offer mid-day rate improvements). Loan Originator Perspective Today’s Federal Reserve Policy Statement was a non-event, as both their tone and benchmark interest rate were essentially unchanged.  Bond markets recouped small morning losses following the statement, and some lenders improved their PM pricing.  Looks like our rising rate trend may be on hold, but I don’t see much impetus for rates to improve significantly either.  Conservative...

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Mortgage Rates Down to 2-Week Lows

Mortgage rates continued lower today, despite an absence of improvement in underlying bond markets.  That’s not too surprising considering the average lender didn’t fully adjust yesterday’s rates to reflect market improvements.  Unlike yesterday, today was essentially flat for bond markets as investors prepare for 2 days of information from and about the Fed. Tomorrow brings the Fed’s official policy announcement.  While Fed announcements certainly CAN have a lot of impact on rates, that isn’t terribly likely to be the case tomorrow.  Investors are almost certain the Fed won’t move rates at this meeting and instead opt to do so at the December meeting.  Of greater importance (and of more interest to investors) is Trump’s pick to replace Janet Yellen as the Chair of the Federal Reserve.  That announcement is expected on Thursday.  While markets are expecting Powell to get the nod, there’s likely some more room for rates to improve once that rumor is confirmed (bonds, and thus “rates,” favor Powell over the other frontrunner). Loan Originator Perspective I mentioned yesterday that pricing didn’t yet reflect Fri/Monday’s full gains, so floating overnight might be advised.  Low and behold, despite remarkably flat bond markets (and some upbeat economic data), my pricing today improved.  The $20 question is whether today’s lack of movement is the end of our rally or a pause in it.  I’d say 60% end, 40% pause.  Floaters be advised. ...

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Mortgage Rates Lowest in a Week

Mortgage rates recovered even more of their recent losses today, following reports that lawmakers were considering “phasing in” a 20% corporate tax rate by 2022 as a part of the current tax reform efforts.  The President’s previously announced tax reform principles call for 20% out of the gate. When those principles were initially released, stock prices and interest rates rose in unison.  On one hand, lower taxes are seen stimulating the economy, which traditionally puts upward pressure on stocks and rates.  On another note, some analysts think the tax plan would result in more government borrowing–something that hurts interest rates specifically because it creates more supply of the bonds that drive interest rate movement (higher supply = lower prices, and lower bond prices = higher rates). With all of the above in mind, any news that detracts from the original tax principles should help rates recover and should also put some pressure on stocks to move lower.  That’s exactly what happened today.  It’s the 2nd straight day of solid gains for rates, bringing most lenders to their best levels in at least a week. Whether this proves to be a turning point in the bigger picture remains to be seen.  Rates are in a well-established uptrend.  While that won’t last forever, we’d like to see a bit more of a recovery before ruling out the continuation of the broader uptrend.  Ultimately,...

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Rate Spike Pauses on Fed Chair Optimism

Mortgage rates recovered some of their recent losses today, with most lenders moving back into Wednesday’s territory.  The improvement followed another round of rumors regarding Trump’s Fed Chair selection process.  Specifically, Jerome Powell was indicated as the frontrunner this time around. Here’s why that’s important. The Fed Chair (a role currently filled by Janet Yellen) is perhaps the most important person in the world when it comes to interest rate movement.  While the Fed will ultimately be forced to adapt its rate policy to economic conditions, so many of the ups and downs we experience along the way are driven by the Fed’s decisions.  And the Fed Chair has a disproportionate amount of control over those decisions compared to anyone else at the Fed.  In short, don’t think of the Fed as a “jury” of equals.  There’s a clear hierarchy, with the Chairperson obviously being at the top. Rates, and markets in general, prefer Powell to Taylor (the two frontrunners).  So when the Powell headlines came out, rates (and stocks for that matter) improved noticeably.  While this wasn’t a big enough improvement to change the bigger-picture trend toward higher rates, it definitely kept that trend from accelerating.  More importantly, it provides anyone who’d been unable to do so previously an opportunity to lock in a rate that’s actually better than the previous day’s offerings for the first time this week. Loan...

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Mortgage Rates Are Moving Quickly Higher

Mortgage rates are in a bit of trouble, having moved higher at the fastest pace since late June in the past few days.  If you’ve had occasion to read an update on mortgage rates from most major media outlets today, the news is actually worse than you’ve heard.  The most widely-cited source on any given Thursday is Freddie Mac’s weekly Primary Mortgage Market Survey.  While accurate over time, it doesn’t account well for day to day changes when things are volatile–especially if those changes occur between Wednesday and Friday. Unfortunately, Wed/Thu of this week have been worse than any other consecutive days in terms of upward rate movement.  Whereas Freddie’s survey suggests rates being roughly 0.06% higher versus last week, the average lender is offering rates today that are just over 0.125% higher compared to last Thursday.  That’s an abrupt move for a 7-day window any way you slice it. What’s driving this and what’s the damage? First off, the damage could certainly be worse.  Rates are still near 4.0%, although many lenders are getting back up to 4.125% now, while the more aggressive lenders move up from 3.875% to 4.0% (for absolutely flawless scenarios).   As for the causes, that’s complicated because we can talk about short-term and long-term motivations–both are open to some level of interpretation.  In general though, we know that monetary (the Fed) and fiscal (the government) policy...

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