Mortgage News

Rates Recover Modestly, But Uncertainty Remains

Mortgage Rate News - Mon, 09/16/2019 - 17:25
Mortgage rates closed out their worst week since 2016 on Friday as the bond market underwent a classic correction after its best month since 2011. The bigger and more sustained a drop in rates, the bigger the potential correction. There were, however, some actual market fundamentals underpinning the rate spike. Some investors are worried that central banks (like the Fed) are starting to think about the current rate cut cycle as shallow and temporary. While that would bode well for the economy, it's not a pleasant thought for longer-term rates (which have already priced in at least 2 more Fed rate cuts in the next few months). In other words, mortgage rates won't care in the slightest when and if the Fed cuts rates this Wednesday. The Fed's outlook on future rate cuts and on its policy stance
Categories: Mortgage News

Worst Week For Mortgage Rates Since 2016

Mortgage Rate News - Thu, 09/12/2019 - 18:17
Mortgage rates didn't have a great day today, moving even higher from what were already the worst levels in a month as of yesterday afternoon. In and of itself, this single day wasn't any more dramatic than the average "bad day," but taken together with the past 3 days and the assessment is more grim. Simply put, this is now the worst week for mortgage rates since the 2016 presidential election. If that seems way too depressing, don't worry, I have a counterpoint for you! Each of the 3 weeks before that saw at least one day of mortgage rates at their lowest levels in 3 years. These also happened to be 3 of the most stable weeks that rates have ever enjoyed when holding so close to long-term lows. The typical pattern is for a quick run down followed by a similarly quick jump back up. For instance
Categories: Mortgage News

Mortgage Steady at Recent Highs

Mortgage Rate News - Wed, 09/11/2019 - 17:32
Mortgage rates were roughly unchanged today for the average lender as underlying bond markets finally calmed down. Over the past few days, bond yields have been rising quickly, effectively correcting from the lowest levels in more than 3 years. The same is true for mortgage rates with the average conventional 30yr fixed quote hitting 1-month highs yesterday and holding in the same territory today. One school of thought behind the recent rate drama is that the bond market is apprehensive about upcoming central bank policy announcements, both from Europe (ECB) and the US (the Fed). The ECB announcement is tomorrow morning, so it could make some sense to see bonds level-off in advance of the first central bank flashpoint. This means there's high potential for volatility tomorrow, but the Fed announcement
Categories: Mortgage News

Mortgage Rates Highest in More Than a Month

Mortgage Rate News - Tue, 09/10/2019 - 18:18
Mortgage rates and the broader bond market are both in the midst of a correction after hitting the best levels in more than 3 years last week. This is a correction that many market watchers were worried about on several occasions in August. But every time it looked like rates had bottomed, it only took a few days of indecision before they were again pressing into new long-term lows. This most recent break from long-term lows has been far more threatening with 2 of the past 4 business days bringing the biggest single-day jumps in several months. As a result, the average lender is now back to offering rates last seen in early August. Notably, a conventional 30yr fixed rate of 3.75% is right in the neighborhood of what many borrowers would be quoted today. That said, for many lenders 3.75% makes
Categories: Mortgage News

Mortgage Rates Hold Steady

Mortgage Rate News - Fri, 09/06/2019 - 17:40
Mortgage rates held steady today, which is a victory in light of yesterday's big jump higher. Part of that jump was due to fear that today's jobs report would strike a similar tone to some of this week's other economic reports. That would have been a problem for rates because stronger economic data pushes rates higher, all other things being equal. But the jobs report was merely "OK," at best, with the overall tally of newly created jobs coming in at 130k. That was well short of the 158k forecast, but also well within the margin of error for the data. In response, the bond market (which underlies mortgage rates) managed to make it back to unchanged levels on the day. Before the jobs report, it was indicating another move toward higher rates. In the bigger picture, yesterday's big jump doesn
Categories: Mortgage News

Mortgage Rates Are Higher (Not Lower) Versus Last Week

Mortgage Rate News - Thu, 09/05/2019 - 16:35
Mortgage rates walked back a decent chunk of their recent improvements today. This claim runs counter to almost any other coverage you'll see, but I'm right and they're wrong. Actually to be fair, I'm right in a timely way and they're right in a not-so-timely way. At issue is the weekly release of Freddie Mac's mortgage rate survey, which only captures responses from the first half of any given week. Big market movement from Wednesday afternoon through Thursday morning is never represented in the Thursday release. Despite that, media outlets rely heavily on Freddie's data to craft their customary once-a-week mortgage rate pieces. Today's examples include multiple iterations of "the lowest rates in 3 years," etc. It's true that rates were at their lowest levels in 3 years, but it was only true
Categories: Mortgage News

How Low Can Mortgage Rates Go?

Mortgage Rate News - Wed, 09/04/2019 - 20:24
Mortgage rates are on a tear . In the bigger picture, 2019 has been the best year in more than a decade. Only 2002 was arguably on the same level in terms of the move from peak to trough. If we include late 2018's higher rates the overall move is now bigger than the one seen in 2008/2009. While someone somewhere might be willing to draw a few parallels, 2019 is nothing like 2009. In other words, trade war fears and global growth concerns (which deserve most of the credit for the downward momentum in rates) are nothing like the financial crisis and Great Recession. Why, then, have the current motivations packed such a punch? The biggest reason for the size of 2019's move is the extent to which rates were arguably "too high" at the end of 2018. It's really that simple. There was a lot of defensiveness
Categories: Mortgage News

Mortgage Rates Set Another Long-Term Low

Mortgage Rate News - Tue, 09/03/2019 - 17:31
Mortgage rates had to endure some paradoxical momentum and delayed reaction to the broader bond market rally lately, but now, it's payback time! Not only have mortgagees been able to move lower over the past 4 days, but they've done so even as Treasury yields remained flat. More simply put, 10yr Treasury yields ended the day just over 1.45% on last Wednesday. Today's comparable closing level of 1.46%. Mortgage rates, on the other hand, are down 0.08-0.11% over the same time frame, depending on the lender. While it's not a massive improvement versus Friday's latest levels, today's average offering is nonetheless the best in 3 years. Loan Originator Perspective Bonds were boosted by weak ISM data this morning, and both treasuries and MBS held their gains through closing. My pricing was incrementally
Categories: Mortgage News

Yes, Mortgage Rates are Lower and 10yr Yields are Higher Today

Mortgage Rate News - Thu, 08/29/2019 - 16:58
Two days ago, I wrote an article entitled " No, Mortgage Rates Aren't Based on 10yr Treasury Yields ." It's worth a read if you're not already up to speed on why that's a true statement. It also paves the way to understand why today's headline can be true (and in fact, it is). Mortgage rates moved LOWER today. Granted, it wasn't a huge move lower, but it's notable against the backdrop of 10yr Treasury yields that were more than 0.06% higher at one point. Much of the discussion regarding mortgages vs Treasuries centers on MBS (the mortgage-backed securities that serve as the base ingredient for mortgage rates) and the fact that they don't always move in the same direction as Treasuries. But that's only part of today's divergence . We often talk about TIMING being responsible for smaller examples
Categories: Mortgage News

Mortgage Rates Back in Line With 3 Year Lows

Mortgage Rate News - Wed, 08/28/2019 - 19:07
Mortgage rates moved lower today as MBS (the mortgage-backed securities that determine the value of mortgages on the secondary market) improved relative to US Treasuries. That's NOT a common occurrence recently! When Treasury yields have moved quickly to long-term highs or lows, MBS tend to lag the move noticeably. As 10yr yields moved even lower at the start of this week, it would be an understatement to say MBS were underperforming. These things happen, however, and the current iteration fits well with precedent. Previous experience suggests TIME and MARKET STABILITY will help the mortgage market close the gap. As of this afternoon, Treasuries haven't made a new low yield for the 2nd straight day. They've also held inside a narrower range on each of the past 2 days (stability!). MBS took
Categories: Mortgage News

No, Mortgage Rates Aren't Based on 10yr Treasury Yields

Mortgage Rate News - Tue, 08/27/2019 - 18:57
Mortgage rates have been putting on a rather frustrating and exciting show in the month of August. On the one hand, they're at or near their lowest levels in 3 years. On the other hand, they're not nearly as low as you'd expect them to be based on movement in markets that almost always track mortgages in lock-step. The 10yr Treasury yield, above all other interest rates has long been thought to dictate mortgage rate movement. That's a complicated thesis to evaluate, because it's true and false at the same time. It's certainly true that Treasuries set the tone for almost any interest rate in the US. They're like an aircraft carrier and other rates are like planes, helicopters, soldiers, rafts, boats, and unmanned submersibles that are along for the ride. At any given time, mortgage rates may
Categories: Mortgage News

Mortgage Rates Mixed Versus Friday, Depending on Lender

Mortgage Rate News - Mon, 08/26/2019 - 17:08
Mortgage rates are sort of all over the place at the moment, and almost never where you'd expect. Those who haven't been following the bond market too closely generally expect higher rates than what we've been seeing recently. Those who are well-versed in the longstanding relationship between mortgages and Treasury yields generally expect rates to have fallen MUCH faster than they actually have. Even on shorter time horizons, the mortgage market is a tale of misdirection . For example, 10yr Treasury yields are basically unchanged today, but mortgage rates are either higher or lower depending on the lender. Some lenders responded to market conditions on Friday and bumped rates slightly lower. Among those lenders, some are in roughly similar shape today, but several responded to today's market
Categories: Mortgage News

Mortgage Rates Pop Higher

Mortgage Rate News - Wed, 08/21/2019 - 17:33
Mortgage rates moved higher today, and it had nothing to do with any of the day's events or news headlines. Quite simply put, the bond market (which dictates the rates that can offered by lenders) had already begun to weaken as of yesterday afternoon. Weakness continued overnight as global financial markets dialed back their demand for safe havens. In market terms, a safe haven is generally a lower rate of return with a higher guarantee of the return remaining stable. Fixed rate government bonds from financially solvent countries are a classic safe haven. And no matter what you've heard in the news, the US mortgage market is also squarely in the safe haven camp. The only major risk associated with mortgages as far as investors are concerned is how long the mortgage will last. That uncertainty
Categories: Mortgage News

Mortgage Rates Fairly Flat Today, But Volatility Could Increase

Mortgage Rate News - Tue, 08/20/2019 - 17:41
Mortgage rates held steady today, for the most part. If there was a leaning, it was toward slightly lower rates, but not by a wide enough margin to be significant. At first glance, holding steady at the lowest levels in nearly 3 years is great! In fact, it's still great at second glance. But the more information we consider, the more we may wonder why they're not lower. Reason being: 10yr Treasury yields (which often move in the same direction as mortgage rates and by similar amounts) are noticeably lower today! So why aren't mortgages following? For the explanation, we can simply dust off last Friday's commentary: The reasons for the discrepancies have to do with the fundamental differences between mortgages and Treasuries as investments. Simply put, a mortgage can be paid off any time whereas
Categories: Mortgage News

Mortgage Rates Hold Relatively Steady Despite Bond Market Weakness

Mortgage Rate News - Mon, 08/19/2019 - 17:59
Mortgage rates mostly held steady today , despite a move higher in broader interest rate indicators like the 10yr Treasury yield. Treasuries and mortgage rates typically track each other quite well, but that relationship has broken down in recent weeks due to the rapid drop in rates and the increase in volatility. The mortgage sector has a much tougher time adjusting to new realities compared to Treasuries. In other words, mortgage rates haven't been able to move lower nearly as quickly (though they have still managed to hit their lowest levels since 2016). The upside to that problem is that we get days like today where Treasury yields rebound without significantly damaging mortgage rates. In fact, many lenders are offering the same rates seen on Friday. Loan Originator Perspective Bond markets
Categories: Mortgage News

Mortgage Rate Weirdness May Be Working in Your Favor Today

Mortgage Rate News - Fri, 08/16/2019 - 20:04
Things have been weird enough for mortgage rates recently that we were forced to add a " Temporary Note on Mortgage Rate Inconsistency " to our daily coverage recently. It will likely return before too long, but with a few edits for clarity. Edits will also need to account for days like today, which offered a prime example of how the inconsistency can be corrected. There's a decent chance those first 3 sentences are confusing and/or relatively meaningless, so let's change that! Mortgage rates aren't the only rates out there. They exist in an ecosystem with more established players like US Treasury yields. They move so much like Treasury yields that even very smart people mistakenly believe Treasuries (specifically, the 10yr) dictate mortgage rates. Recently though, mortgage rates have moved
Categories: Mortgage News

Mortgage Rates Fall Back Down to 3-Year Lows

Mortgage Rate News - Thu, 08/15/2019 - 17:35
Mortgage rates fell today as the underlying market for mortgage-backed-securities (MBS) actually did a better job of keeping pace with broader bond market gains--not something they've been doing very well lately! For some lenders, it was enough to get them back to August 6th's levels, which were the best in nearly 3 years. The average lender can quote a conventional 30yr fixed rate of 3.625% for top tier scenarios. That said, there is much more variability between lenders at the moment. Take a look at the " Temporary Note on Mortgage Rate Inconsistency " below to learn more about why things have been volatile and inconsistent. There's no reason to expect broader market volatility to suddenly disappear, but as long as Treasury yields don't undergo a massive spike, the mortgage market should
Categories: Mortgage News

Mortgage Rates Are a Mess!

Mortgage Rate News - Wed, 08/14/2019 - 19:00
Mortgage rates were unchanged for many lenders today which is utterly and completely shocking given the other market developments that tend to coincide with rates moving lower. Specifically, stocks tanked and 10yr Treasury yields plummeted to the lowest levels since September 2016. For anyone under the impression that 10yr yields dictate the direction of mortgage rates without exception, it's high time to reassess that worldview. The bottom line is that rates are doing an absolutely terrible job of keeping pace with the rally in the broader bond market. The " Temporary Note on Mortgage Rate Inconsistency " below will be informative in that regard. With that in mind, many lenders were unchanged today for slightly less complicated reasons. Sure, underlying mortgage bonds didn't improve as quickly
Categories: Mortgage News

Mortgage Rates Jump After Tariff Delay

Mortgage Rate News - Tue, 08/13/2019 - 18:48
Mortgage rates were still unchanged for many lenders as of this morning. There were even a few offering slightly lower rates compared to yesterday morning's offerings. That was a welcome development considering broader bond markets (which generally dictate rates) were pointing toward higher rates at the time. This can be explained by the inconsistent behavior of the mortgage market with respect to US Treasuries (and/or "the broader bond market") discussed in greater detail in the temporary "note on mortgage rate inconsistency" below. Today's iteration had more to do with the volatility component as bonds were somewhat rocked by headlines regarding the delayed implementation of several recently announced tariffs. If the announcement of tariffs was good news for rates 3 weeks ago, the delay is
Categories: Mortgage News

Mortgage Rates Miraculously Flat Despite Massively Lower Treasury Yields

Mortgage Rate News - Mon, 08/12/2019 - 18:49
Mortgage rates were unchanged to slightly higher today--a claim that utterly boggles the mind of anyone who thought they understood the relationship between bond markets and the mortgage world. ALMOST without fail, a big drop in 10yr Treasury yields will coincide with lower mortgage rates. In fact, many people believe (albeit incorrectly) that mortgage rates are based on the 10yr yield. But today, despite a substantial drop in Treasury yields, mortgage rates are stuck in the mud. Since this could continue to be the case, I'm going to include the following brief statement/reminder until the situation subsides: A note on mortgage rates not improving even when 10yr yields are falling: Mortgages and the bonds that underlie them (MBS) are subject to one major uncertainty that doesn't affect US Treasuries
Categories: Mortgage News