Author: Editor - Finance Top Stories

Mortgage Rates Slightly Higher

Mortgage rates moved higher today, but the changes were minimal for most lenders.  Bond markets (which underlie interest rates) have been searching for inspiration recently and largely coming up short.  This morning contained several economic reports and the House passed its tax bill in the afternoon, but none of those events caused much of a stir for bonds.  In fact, all of the bond market movement responsible for today’s higher rates occurred during Asian and European trading hours.  When US traders got in for the day, bonds were almost perfectly sideways through 3pm. With next week bringing the Thanksgiving holiday and with the Senate not even taking up the tax bill debate until the following week (they’re out all of next week), it’s fair to wonder how much worse the lack of inspiration will get.  The risky thing about these periods of lighter participation and lower conviction in financial markets is that they can result in unexpected and seemingly unjustified volatility.  Lenders also tend to be less aggressive when it comes to offering better rates following bond market improvements.  That generally decreases the benefits of floating in the near term. Loan Originator Perspective Bond markets regressed slightly today, as pundits pondered whether tax reform would pass the Senate.  My pricing was minimally worse than Wednesday’s.  A Senate train wreck on tax reform could boost bonds, but I’m not willing to...

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Mortgage Rates Lower After Inflation Data

Mortgage rates fell today, largely in response to the past two days of bond market improvement.  In other words, lenders had been keeping their guard up ahead of today’s key inflation data (The Consumer Price Index, or “CPI”).  While it’s true that a strong CPI report had the potential to push rates back to the highest levels since this summer, today’s data wasn’t strong enough.  In fact, most of the metrics were roughly in line with forecasts.  Still, the strength and resilience in bond markets shouldn’t be discounted.  Bonds also digested strong Retail Sales data and managed to maintain stronger levels achieved overnight.  In general, “strength” in bond markets translates to lower mortgage rates, although there can be some lag between the two.  Most lenders continue quoting conventional 30yr fixed rates in the 4.0% range, but today’s improvement brings some of the aggressive lenders back down to 3.875% on top tier scenarios.  Most borrowers will simply see today’s improvement in the form of lower closing costs (or a bigger lender credit) on the same rates quoted yesterday. With the inflation data out of the way, there is less immediate risk in the coming days.  That said, rates have yet to commit to a strong move below their best recent levels.  That means locking and floating should still be approached cautiously, but perhaps with slightly more room for optimism compared to...

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Mortgage Rates Mixed Depending on Lender; Volatility Ahead

Mortgage rates didn’t move much today, despite moderate improvements in bond markets.  Typically, stronger bond markets result in lower rates, but if anything, more lenders moved into slightly weaker territory.   That has a lot to do with the fact that bonds were in weaker territory around the time most lenders put out the first rate sheets of the day.  With bonds improving in the afternoon, several lenders have issued mid-day reprices, bringing their rate sheets more in line with the underlying market.   In a broader sense, if we’re not seeing widespread participation in mid-day reprices (and we’re not), it’s because underlying markets have yet to definitively overcome the slow, steady trend toward higher rates over the past few months.  Tomorrow morning’s Consumer Price Index brings the risk of more confirmation for that trend, but only if it comes in stronger than expected. Economists are currently expecting a “core” year-over-year inflation reading of 1.7%–the same as the past 6 months.  Any improvement from there could be seen as the first sign of growing inflation pressures–something that would ensure the Fed is as restrictive as its wiling to be in terms of monetary policy.  That means Fed rate hikes and decreased bond buying would stay on track.  Both of those policy stances would keep upward pressure on rates. Loan Originator Perspective Bond markets posted minor gains today, as traders eyed Wednesday’s looming...

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Mortgage Rates Jump to 2-Week Highs

What a difference 2 days make! Freddie Mac’s weekly rate survey was out yesterday prompting multiple news outlets to declare “slightly lower rates” on the week.  Given that Freddie’s survey only gathers responses through any given Wednesday, the results jived with what we were seeing on lenders’ actual rate sheets. On Wednesday, mortgage rates were indeed at their best levels in more than 3 weeks.  But after 2 days of relatively abrupt weakness, rates quickly find themselves at the highest levels in 2 weeks.  Adding to the frustration is the absence of any single, obvious motivation for the weakness.  In order to account for it, we’d have to discuss several esoteric developments in bond markets (if you’re into that sort of thing, I go into more detail in the MBS Commentary channel).  One simple development is “uncertainty.”  Oftentimes, uncertainty helps bonds  because it raises questions about economic progress.  Investors move money into bonds (which pushes rates lower) to avoid the volatility or weakness they might be worried about seeing in stocks.  In the case of dueling banjos belting out tax reform tunes (both the House and Senate have drafted bills), the uncertainty is more neutral.  It doesn’t necessarily imply potential weakness or strength in stocks or bonds, so both have given up some ground over the past 3 days.  To reiterate, that’s just one of several potential factors at the...

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Mortgage Rates Higher as Lenders Catch Up to Yesterday’s Market Moves

Mortgage rates moved higher for the first time this week, ending a 3-day run at the best levels since mid-October.  Today’s rates are roughly in line with those seen on November 3rd.  Compared to yesterday’s closing levels, bond markets (which dictate mortgage rates) are roughly unchanged today.  That typically corresponds with relatively unchanged mortgage rates.  Today’s departure from the norm is due to bond market weakness yesterday afternoon, which came on too gradually and too late in the day for most lenders to adjust rate sheets accordingly.  Moreover, bond markets were actually in weaker territory this morning when lenders released today’s rate sheets.  That means they had to account for yesterday’s bond market weakness as well as the additional AM weakness today.  The bounce back in bond markets (this afternoon) suggests lenders have some room to offer rate sheet improvements, but so far, only a few have made any changes.  That means many lenders will have some wiggle room tomorrow morning and that rates would likely be slightly lower if bond markets don’t move much overnight. To simplify all of the above, as we discussed yesterday, small red flags in markets translated to slightly higher rates today, and tomorrow can once again be viewed from a more neutral standpoint. Loan Originator Perspective Bond markets endured a challenging day today, as uncertainty on proposed US tax reforms and ECB bond purchasing tapering...

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