Mortgage News

Here's Why Mortgage Rates Dropped Even Though Markets Disagreed

Mortgage Rate News - Fri, 08/09/2019 - 16:52
Mortgage rates moved lower today even though the broader bond market suggested they should have remained flat or higher. In several of this week's previous articles, we've discussed the volatility that's been wreaking havoc on the world of mortgage rate setting for lenders. Simply put, when the moves get bigger and when the direction changes more frequently, mortgage rates take extra damage relative to Treasury yields (a risk-free benchmark for most any other rate in the US). Conversely, when rampant volatility begins to ebb, lenders are able to repair some of that damage. The steadier the broader bond market can remain, the more we may see mortgage rates fall , even if outright trading levels aren't suggesting as much of an improvement. More simply put, the 10yr Treasury yield is at 1.738
Categories: Mortgage News

No, Mortgage Rates Are No Longer "Sharply Lower" This Week!

Mortgage Rate News - Thu, 08/08/2019 - 17:11
Mortgage rates were sharply higher today, with the average 30yr fixed rate quote rising by almost an eighth of a percentage point in some cases. A move of that magnitude in one day is the sort of thing that only happens a few times a year. Surprisingly, a multitude of headlines claim that rates are sharply LOWER this week. What gives?! If you happened to catch yesterday's rate commentary , you already know where this is going. There's an over-reliance on the part of major media outlets (and even in some corners of the mortgage industry itself) on the weekly mortgage rate report from Freddie Mac. Freddie is transparent about the limitations of its data. They'll be the first to tell you that most of the responses come in on Tuesday and that responses are only collected on the first 3 days of
Categories: Mortgage News

Warning: Tomorrow's Mortgage Rate News Will be Wrong

Mortgage Rate News - Wed, 08/07/2019 - 20:01
Mortgage rates have had a great week. Although rates are slightly higher today versus yesterday, they're still exceptionally close to the lowest levels since November 2016. That's actually been the case since late last week as more than half of the improvement in underlying bond markets (which dictate rates) was in the books by Friday afternoon. It took lenders a few days to get caught up with the market movement, but by yesterday afternoon and this morning, top tier scenarios were seeing rate quotes of 3.625% in many cases (25%+ down, perfect credit, etc). Tomorrow will bring a raft of mortgage rate headlines from major news outlets due to the typical Thursday release of the widely-followed Freddie Mac Primary Mortgage Market Survey. Those stories will all be wrong . How can I be so sure?
Categories: Mortgage News

Lowest Rates Since November 2016

Mortgage Rate News - Tue, 08/06/2019 - 18:54
Mortgage rates hit their lowest levels since November 2016 late last week and they've proceeded to set a new long-term low each day since then. Today was no exception. That's fairly surprising at first glance, considering the underlying changes in the mortgage-backed securities (MBS) that most directly affect mortgage rates. Typically, when I bring up MBS prices, it's to highlight a discrepancy between the movement in Treasury yields and mortgage rates. Many relatively savvy market-watchers and consumers mistakenly believe US Treasuries dictate mortgage rate movement when in fact, that' the job of MBS. It just so happens that MBS and Treasuries tend to move in lock-step. When they don't, we can see mortgage rates diverge from Treasury yields by small amounts. Today, however, MBS indicated higher
Categories: Mortgage News

Just When You Thought Rates Wouldn't Go Any Lower

Mortgage Rate News - Mon, 08/05/2019 - 16:53
Mortgage rates were already in great shape on Friday after having fallen to the lowest levels since November 2016. Rather than draw inspiration from the week's big ticket events (Fed announcement and jobs report), the biggest source of inspiration was a flare-up in trade tensions following Trump's announcement of new tariffs on Chinese imports. Trade war drama flared over the weekend as China's central bank set the country's currency at the weakest levels in more than a decade. What does Chinese currency have to do with US mortgage rates? Quite a lot, really! The outright level of Chinese Yuan versus the US dollar is not what's important here. Rather, it was the fact that such a move was directed by the Chinese government in an obvious retaliation to Trump's trade war escalation. In other words
Categories: Mortgage News

Mortgage Rates Drop to New Multi-Year Lows

Mortgage Rate News - Fri, 08/02/2019 - 19:59
Mortgage rates fell again on Friday as lenders finally saw recent bond market gains stabilize enough to act on. In other words, lenders don't always keep their mortgage rate offerings moving in lock-step with the underlying bond market (which dictates rates over time). This helps protect them from potential volatility, which ultimately allows them to keep rates lower than they otherwise would be (volatility is costly in the mortgage rate world). Yesterday's bond market movement was big and unexpected. It took 10yr Treasury yields to the lowest levels since November 2016. Mortgage rates weren't able to say the same until today. Interestingly enough, the bonds that specifically underlie mortgages failed to make any major improvement today (which is an entire piece of analysis unto itself). That
Categories: Mortgage News

Mortgage Rates Are Actually Much Lower Today

Mortgage Rate News - Thu, 08/01/2019 - 16:06
Mortgage rates fell today, but by how much depends on the lender! This runs contrary to the average news story which contains some reference to rates being flat week-over-week (due to Freddie Mac's weekly rate survey data, which unfortunately doesn't account for big market movement on Thursdays and Fridays). There was a better case to be made for such things yesterday as the Fed drew a mixed reaction from the bonds that underlie mortgages. If you didn't catch it, yesterday's article is highly recommended for those who want to understand why the Fed rate cut had no effect on mortgage rates. HERE IT IS . One of the takeaways in that article is that rates would be dependent on economic data and developments, and that there were a few big-ticket items left this week. One of those was today's ISM
Categories: Mortgage News

No, The Fed Didn't Cut Mortgage Rates!

Mortgage Rate News - Wed, 07/31/2019 - 20:06
Mortgage rates were mostly unchanged today, which will come as a surprise to scores of consumers who mistakenly believe the Fed's 0.25% rate cut equates to a 0.25% drop in rates. The Fed does not set mortgage rates! Actually, to be fair, the Fed Funds Rate (that thing everyone is talking about today) is in fact the basis for Home Equity Lines of Credit (HELOCs) in many cases, but that's it as far as the mortgage world is concerned. The most common mortgages are determined by other parts of the financial market. In fact, mortgages actually "turn into" securities that are traded in financial markets as a part of the process that makes them safer and easier for investors to buy. Those securities trade just like other securities, for the most part (e.g. stocks, bonds, etc.), and it's the price
Categories: Mortgage News

Mortgage Rates Stay Calm Before Tomorrow's (Potential) Storm

Mortgage Rate News - Tue, 07/30/2019 - 17:09
Mortgage rates haven't moved much this week, or last week, or the week before that. In fact, for the average prospective borrower, there haven't been any major changes since first making it down to the multi-year lows in June. That said, there has been enough volatility to matter. Today wasn't a great example of that, but tomorrow or one of the two days that follows, may be. In addition to some more significant economic reports coming out in the morning, tomorrow brings the Fed rate decision. To be fair, the Fed's decision has already been made, best anyone can tell. A 25 basis point (0.25%) rate cut is basically guaranteed. That might seem like a good thing for mortgage rates, but the benefits have already been reaped. Tomorrow's market movement depends more on the economic data and the specifics
Categories: Mortgage News

Mortgage Rates Start Slow, But Risks Increase Throughout The Week

Mortgage Rate News - Mon, 07/29/2019 - 16:43
Mortgage rates moved back down , albeit just slightly, into last week's range. They'd risen for 2 straight days by Friday, and today's improvement leaves them closer to Wednesday's levels. That assessment requires a bit of clarification, however. Rate movement can refer to changes in the actual interest rate that determines the monthly payment amount of a mortgage. But there are other upfront fees and credits that affect the overall cost of financing. For example, if you are being quoted a lower rate than anyone else, but have to pay thousands of dollars to get that rate, you might not be saving any money over time. Changes in those upfront costs happen far more readily than changes in the actual interest rates (technically referred to as "note rates"). Today was definitely not big enough to
Categories: Mortgage News

Big Week Ahead For Mortgage Rates

Mortgage Rate News - Fri, 07/26/2019 - 17:13
Mortgage rates edged just slightly higher today for the average lender, marking the 2nd day of weakness this week. In terms of the underlying bond market, however, today was purely an extension of yesterday's trading patterns that began shortly after rates rose in response to the press conference with European Central Bank (ECB) President Mario Draghi. When we talk about "rates" rising in response to Draghi, it can mean one of two things. As far as the average mortgage borrower is concerned, it can refer to the generally higher mortgage rates yesterday. But "rates" can also refer to the yields on various bonds that trade throughout the day. Whereas mortgage rates might only be adjusted a few times per day at the most (and typically not at all), bonds are moving hundreds to thousands of times
Categories: Mortgage News

Mortgage Rates Bounce Higher Thanks to Europe

Mortgage Rate News - Thu, 07/25/2019 - 15:58
Mortgage rates were moderately higher today marking the first detectable shift of the week. Many of the market participants who trade the bonds responsible for rate movement had been waiting to see what the European Central Bank (ECB) had to say in its policy announcement today. Although the announcement itself was rate-friendly, traders felt that ECB President Mario Draghi wasn't rate-friendly enough in the subsequent press conference. Bonds quickly began losing ground as Draghi spoke early this morning. The weaker levels ( which imply higher rates ) were already in place by the time most mortgage lenders generate their first rate sheet of the day. As such, most lenders were quoting higher rates right out of the gate. The good news is that "higher rates" may not mean the same thing to you
Categories: Mortgage News

Mortgage Rates Unchanged Again, But That's Less Likely Tomorrow

Mortgage Rate News - Wed, 07/24/2019 - 15:54
Mortgage rates barely budged today, with the average lender offering almost the exact same terms as yesterday. That took some doing in the form of strength in the underlying bond market. As of yesterday afternoon, bonds were at their weakest levels of the day, thus implying today's rates would be higher unless overnight market movement was much friendlier. That's exactly what happened thanks to extremely weak economic data in Europe. Economic weakness promotes strength in the bond market, which in turn pushes rates lower . Naturally, European data had the biggest benefit for European bonds, but there tends to be some spill-over between the world's biggest bond markets. In today's case, the benefit to the US bond market was big enough to erase yesterday afternoon's weakness, thus preventing
Categories: Mortgage News

Mortgage Rates Hold Steady Despite Bond Market Weakness

Mortgage Rate News - Tue, 07/23/2019 - 18:09
Mortgage rates side-stepped today, bringing an end to a gentle but consistent move lower over the past 5 business days. During that time the average conventional 30yr fixed rates for top tier scenarios fell about an eighth of a percentage point (0.125%). While that only translates to about $7 per month for every $100k financed, it's a pretty decent move historically speaking. Today's bond market momentum suggests the move could be in jeopardy. Bonds are the most direct source of inspiration for mortgage rates, and indeed, for rates in general. The 10yr Treasury yield tends to track mortgage rates exceptionally well, and it was roughly 0.03% higher today. The average lender, on the other hand, didn't change mortgage rates at all. This has to do with the separate set of bonds specifically tied
Categories: Mortgage News

Mortgage Rates Fight to Remain at Week's Best Levels

Mortgage Rate News - Fri, 07/19/2019 - 20:30
Mortgage rates Moved just slightly lower today, despite some push back from underlying bond markets. Typically, weakness in the bond market (like the kind we saw today) corresponds to rising rates--even if only a modest amount. The compensating factor today was the timing of yesterday's bond market gains. Simply put, there is a bit of lag between bond market movement and mortgage lenders' ability or willingness to pass those gain along in terms of improved rates. Additionally, in this more volatile environment with rates already very close to super long-term lows, lenders are generally hesitant match the bond market's movement step for step. All of the above left lenders with some insulation against today's bond market weakness. Had it been any bigger, we probably would be talking about slightly
Categories: Mortgage News

Mortgage Rates Lowest This Week Despite Stronger Economic Data

Mortgage Rate News - Thu, 07/18/2019 - 18:12
Economic data and mortgage rate movement go hand in hand. A stronger economy puts upward pressure on rates. A contracting economy helps rates move lower. While this is far from the only source of inspiration, it's indirectly linked to other major sources of inspiration (like Fed policy). Paradoxically, rates managed to move a bit lower today despite an exceptionally strong economic report. What's up with that? The Philadelphia Federal Reserve district publishes a highly regarded report on the manufacturing outlook each month (dubbed simply "The Philly Fed Survey"). It crushed expectations today. True to expectations, the bond market (which underlies mortgage rate momentum most directly) weakened at first, thus suggesting higher rates. But bonds quickly found their footing. This likely had to
Categories: Mortgage News

Mortgage Rates Drop as Bond Gains Accelerate

Mortgage Rate News - Wed, 07/17/2019 - 17:33
Mortgage rates improved today, depending on the lender and the time of day! Underlying bond markets were only modestly stronger in the morning. As such, the average lender only offered modest improvements over yesterday's rates at first. But as the day progressed, market volatility favored bonds. Once bonds improved enough, many lenders ended up offering positive reprices. Even then, most lenders don't tend to drop rates enough to fully reflect friendly market movements such as today's. That means tomorrow's rates could be even better if the underlying bond market can merely manage to hold steady by tomorrow morning. Today's Most Prevalent Rates 30YR FIXED - 3.875% FHA/VA - 3.625% 15 YEAR FIXED - 3.5-3.625% 5 YEAR ARMS - 3.375-3.75% depending on the lender Ongoing Lock/Float Considerations
Categories: Mortgage News

Mortgage Rates Under Modest Pressure After Retail Sales Data

Mortgage Rate News - Tue, 07/16/2019 - 18:26
Mortgage rates were flat to slightly higher today, following a stronger-than-expected Retail Sales report. The bond market (which dictates mortgage rates) was eagerly awaiting the week's first major economic data. Even though the Fed will almost certainly cut rates at the end of the month, additional cuts depend heavily on the balance of economic data. To whatever extent the data is strong, the Fed becomes less likely to continue cutting rates and the broader financial market becomes less interested in bonds. When investors are interested in buying bonds, it's good for rates! Fortunately for prospective borrowers, today's movement was minimal. In fact, many lenders are effectively unchanged versus yesterday. Moreover, bonds managed to improve throughout the day with those specifically underlying
Categories: Mortgage News

Mortgage Rates Little-Changed Despite Bond Market Gains

Mortgage Rate News - Mon, 07/15/2019 - 16:41
Mortgage rates were mostly flat to begin the new week, even though underlying bond markets were in stronger territory. Bonds, more than anything else, dictate the day-to-day direction for mortgage rates. That said, there are different varieties of bonds as well as different levels of willingness to react on the part of mortgage lenders. In today's case, the bonds that specifically govern mortgages aren't doing quite as well as the broader bond market. As of this morning, lenders weren't seeing enough improvement to make any meaningful changes to their rate offerings. Mortgage-backed bonds have improved somewhat throughout the day. At face value, that seems like it should help mortgage rates and indeed it might. The issue is that there hasn't been quite enough improvement for the average lender
Categories: Mortgage News

Highest Mortgage Rates in More Than 3 Weeks

Mortgage Rate News - Fri, 07/12/2019 - 18:28
Mortgage rates moved decisively higher this week as the underlying bond market finally began shifting gears. After the Fed meeting in June, rates moved to the lowest levels in more than 2 years and had been holding in a narrow range since then. The risks of a breakout were set to increase as the market digested several key events. One of the most important of those events was this week's congressional testimony by Fed Chair Powell. Interestingly enough, Powell's testimony actually helped rates at first. In the 2nd part of the testimony yesterday, there wasn't much of a market reaction. Instead, it was stronger economic data and poorly received Treasury auction that pummeled the bond market. As bonds weaken, rates rise. Not all lenders fully adjusted their rate sheets to reflect yesterday's
Categories: Mortgage News

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