Author: Editor - Finance Top Stories

Rates Show Resilience But Not Without Help

Mortgage rates held their ground yesterday.  That was a refreshing development given the abrupt move higher over the past 2 weeks and a relatively threatening reaction to Wednesday’s Federal Reserve events.  Now again today, rates have managed to hold their ground.  In some cases, lenders improved by token amounts.  If yesterday was refreshing, today would be doubly so. But the refreshment comes with caveats.  We don’t really know what the natural direction would have been for rates today because underlying markets were clearly affected by overnight headlines regarding North Korea potentially testing an ICBM with a Hydrogen warhead in the Pacific Ocean.  In general, these sorts of headlines lead investors to shed risk–something that frequently takes the form of selling stocks and buying bonds.  When investors buy bonds, rates move lower. Bottom line, the North Korea news helped bond markets (which drive mortgage rates) overnight, and investors were hesitant to push back too hard against that bond rally.  This means we’ll be waiting until next week before being able to see whether or not this recent display of resilience can stand on its own two feet. Loan Originator Perspective More headlines regarding North Korea has helped bonds rally overnight and today.  The gains are quite modest, but you should be seeing better rate sheets.  With today being a Friday, i will continue to float.  We still have solid support just overhead...

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Mortgage Rates Find Some Support

Mortgage rates have been higher almost exclusively for the past 2 weeks.  Yesterday was no exception as the Federal Reserve released a rate hike forecast that was slightly more optimistic than markets were expecting.  By yesterday afternoon, the average 30yr fixed mortgage rate was at its highest levels in over a month.   The Fed news justified a defensive stance among prospective mortgage borrowers.  When rates move initially higher following a Fed announcement, it’s all too common to see that momentum continue in the following day.  In today’s case, we’ve actually seen a bit of support.  Underlying bond markets were in slightly better shape vs yesterday for most of the day, thus allowing lenders to either keep mortgage rates unchanged or to bring them marginally lower. 4.0% remains the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios, but some borrowers may see slightly lower upfront costs today.   Loan Originator Perspective The good news is that bond markets didn’t continue their recent sell-off today.  The bad news is that we didn’t post gains, either.  Whether today’s inaction is merely a lull in our march to higher rates or signals an end to it is the question of the day.  It’s going to take more than a flat day to get me bullish on this market again, float with caution, or not at all.  –Ted Rood, Senior Originator Bonds have...

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Mortgage Rates Highest in More Than a Month After Fed

Mortgage rates rose today following the announcement and–more importantly–the Fed’s updated economic projections.  The Fed holds 8 meetings a year.  They release an official policy announcement after all of those.  Four of the meetings are “special” and are followed not only by a policy announcement, but also by updated economic projections from Fed members.  These projections include an important “dot plot” of the Fed’s rate hike expectations. The so-called dots have been more important than the actual announcement on some occasions.  While most of today’s press coverage will focus on the fact that the Fed finally enacted its plan to shrink its balance sheet.  That was widely expected, however.  Investors weren’t sure how the past few months of economic data and events would affect the rate hike outlook.  As it turned out, the Fed is more optimistic than investors anticipated.  That means they’re more willing stick with the previous rate hike outlook for 2017 and 2018, and those rate hike expectations have a direct bearing on today’s interest rates. Conventional 30yr fixed rates didn’t spike in any brutal sort of way, but given that the past 2 weeks have already seen a somewhat abrupt increase in rates, today still managed to be unpleasant.  4.0% is now the most prevalently-quoted conventional 30yr fixed rate on top tier scenarios.  It had shared the stage with 3.875% roughly equally until today.  That leaves today’s...

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Rates Steady Near Recent Highs Ahead of Fed

Mortgage rates remained unchanged today, on average.  This keeps them in line with their highest levels in more than a month, though admittedly, there hasn’t been much upward movement since the sharpest leg of the spike ended last Wednesday.  Conventional 30yr fixed rates in the “high 3’s” remain available for top tier scenarios, but 4.0% is slightly more prevalent now. While there were several economic reports and seemingly important news stories today (both tend to have an effect on rates), bond markets marched to their own beat.  Traders were generally getting in position for tomorrow’s Fed Announcement.  Two weeks ago, the order of the day had been to push rates lower heading into Hurricane Irma weekend.  There’s been a correction in play since then.  From the long-term lows in early September, traders judged a neutral, pre-Fed rate range to be right around current levels. All of the above leaves us in a position for more meaningful movement tomorrow.  The direction of the movement will be up to the Fed, or rather, to the market’s reaction to the Fed.  We know a rate hike is highly unlikely and that the start of the balance sheet reduction plan is almost a given.  With the nuts and bolts already decided, the focus will be on the Fed’s forecasts and the press conference with Fed Chair Yellen.  The festivities start at 2pm, meaning that rate...

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Mortgage Rates Continue Pushing Recent Highs

Mortgage rates resumed their recent uptrend today, after taking a quick break to end the week last Friday.  The result is another push up to the highest levels in just over 3 weeks.  The average scenario is being quoted rates that are about an eighth of a point higher compared to the lows seen in early September.  The most prevalent top-tier conventional 30yr fixed rates still range from 3.875% to 4.0%, but the latter is increasingly in the spotlight.   Context is important when it comes to this recent rate spike.  The market movement that preceded it was arguably “too good,” with rates benefiting from an unusual combination of geopolitical risk surrounding North Korea and event risk surrounding Hurricane’s Harvey and Irma.  It’s not that markets responded to those events in unexpected ways–simply that the particular confluence of events was unexpected.  In that sense, the recent rate spike simple gets us back to where we otherwise might have been, albeit in a somewhat abrupt manner. The best candidate for the “next big thing” will be the Fed Announcement coming up on Wednesday.  After moving higher over the past week and a half, rates are ready to digest the Fed’s message from a more neutral position.  Even so, it still makes more sense to stay on guard against upward pressure until and unless we see renewed momentum toward lower rates. Loan Originator...

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