Mortgage Rates & Trends: Mortgage Blog

View the lowest rates we have to offer.
Read our RSS Feed Policy

  1. Mortgage Rates: More Jobs = Higher Mortgage Pricing

    By on February 3, 2012

    A blowout Non-Farm Payrolls (NFP) report this morning has mortgage rates heading higher.  After a week filled with data that was roughly in-line with expectations the NFP report blew away forecasts.  The expectations were for 150,000 new jobs to be created in January, yet when the counting was done 243,000 new jobs were documented.  This is certainly confirmation that the US economy has strengthened dramatically, yet the naysayers have already begun to spin why the jobs uptick may be limited.

    Two additional economic reports have the potential to accelerate the upward move in mortgage pricing today or to moderate it.  At 10 AM the ISM Services Index and Factory Orders report will be released.  The ISM Services Index is forecasted to increase from last month, which seems like a good bet given the number of service-sector jobs that were created according to the NFP report.  The Factory Orders report is forecasted to drop slightly which also seems likely given the weakness in the ISM Manufacturing Index earlier in the week.  If these reports come in as expected, I suspect that it will cause further losses in MBS and more upward momentum for mortgage pricing.

    On Monday Euro-Zone financial ministers are meeting and there is hope that approval of the second round of bailout funding will be approved at that time.  However, there is much still to be agreed to.  After reaching a deal with private creditors to cut their payouts from existing Greek debt by 70%, the burden is now on the Greek government to come up with additional savings from labor market and other reforms that will drop the country’s debt/GDP ratio to 120%.  This is a tall task as Greek politicians who must approve these reforms don’t want to be associated with these very unpopular reforms.  I would not be surprised to see Monday come and go with no deal and no bailout funds for Greece.

    After a week in which the attention was primarily on the state of the US economy, next week will see a return to the Euro-centric focus that has been so pervasive for over a year.

    Have a great weekend!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  2. Mortgage Rates: Change in Trend “Or Not”

    By on February 2, 2012

    As I discussed at the outset of this week, it was destined to be a very important week for mortgage rates.  With more data of significance announced this week as compared to almost any other week during the year, we could see a major change in the mortgage trend.  What has been a very favorable, downward trend for mortgage rates could continue with weak economic news. Or strong economic news could cause a reversal in the trend and send mortgage rates higher.  We could have seen this type of movement…or not.  What I did not count on, based on my experience with economic forecasts, was for the data this week to come in almost exactly as forecasted.

    Thus the result so far this week has been virtually no change in mortgage pricing at all since last Friday.  However—it’s only Thursday and the biggest economic report of all is still to come tomorrow.  The Non-Farm Payrolls Report still has the power to establish a trend for mortgage rates for the foreseeable future.  This time though, I will include the possibility that a result, “in-line with expectations”, could reinforce the current level of mortgage pricing.

    Today’s economic data that is moving mortgage pricing nowhere was Productivity and Weekly Jobless Claims.  Productivity was forecasted to increase by .8%–the actual result was an increase of .7%.  Weekly Jobless Claims were forecasted at 370,000—the actual result was 367,000.  Despite these reports offering no positive or negative surprise, I do see signs of improvement.  The drop in productivity signals that businesses are getting less from efficiency or technology changes and will soon need to increase labor in order to boost production.  Also, the slow drop in jobless claims signals a slow (painfully slow) improvement in the labor market.  These measures are connected and the drop in the first should lead to an accelerating drop in the second.

    Related to the European debt crisis, the biggest news of the day is a meeting between German Chancellor Angela Merkel and China’s Premier Wen Jiabao.  The Chinese leader did provide some positive news as he stated that China may “get more involved” with efforts to resolve the crisis.  With almost $4 trillion in reserves, China certainly has the ability to help.  This should provide another calming bit of news for world markets today.

    Today mortgage rates are likely to stay very close to current levels.  Tomorrow the Non-Farm Payrolls report could lead to a change in the mortgage rate trend…or not!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  3. Mortgage Rates: Obama to “Friend” Millions?

    By on February 1, 2012

    Today is the day that Facebook will file its initial public offering.  There are also rumors that today is the day that President Obama will announce his plan to enable millions of homeowners to refinance at current historically low interest rates.  In some ways, it’s as if he is sending a huge “friend request” to American homeowners.  Is this good economic policy or simply politics as usual and what effect will it have on mortgage rates?

    It appears from early trading in mortgage-backed securities (MBS) today that the markets are focused on the Facebook IPO and stocks are set to rise.  This will put pressure on MBS pricing today and could keep rates from falling any further.  Unless the stock market surges more than appears likely, mortgage rates will likely remain close to current levels throughout the day.

    Several economic reports are also in the mix today.  The ADP Employment Change report came in about at the point of expectations though newly created jobs were down significantly from December.  Analysts were encouraged however by the surge in new service sector jobs, explaining that a broad-based improvement in employment across all sectors is necessary for sustainable economic growth.

    At 10 AM both the Construction Spending report and the ISM Manufacturing Index will be released.  The ISM Index is a gauge of manufacturing industry activity and is a very important report.  If this report is at or above expected levels, mortgage pricing may feel more upward pressure.  If, however, we see a surprise to the downside, then mortgage pricing may improve.

    Let’s get back to the President’s refinance plan.  According to reports the plan will call for a tax on large banks to pay for the cost of allowing homeowners to refinance into Federal Housing Administration loans.  Having failed to get the conservator of the other two government-sponsored housing agencies to go along with a similar plan, the president has turned to the one agency he has direct control over.  That being said, the plan has virtually no chance to pass Congress as it has failed to even be acted on twice before.

    As to its public policy and economic implications my belief is that it is poor policy to allow refinancing into government (taxpayer) backed mortgages by homeowners that would not otherwise qualify for the loans.  Economically, it would provide substantial stimulus initially but it might also have the unintended consequence of causing mortgage rates to rise.  Banks unable to handle the onslaught of borrowers, and fearing repurchase risks from loans that go bad, may raise their interest rates to discourage borrowers.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  4. Mortgage Rates: Time for a Pause in the Records

    By on January 31, 2012

    Mortgage rates appear poised for a flat to higher opening for the day as strong economic news is reported and progress is made in Greek debt negotiations.

    Economic data to be reported in the US today includes the Case-Shiller Home Price Index at 9 AM, the Chicago PMI report at 9:45 AM and Consumer Confidence at 10 AM.  Expectations for the Case-Shiller Index are for a continued drop in home prices, yet a decline in the rate of that drop.  The Chicago PMI report is one of the most important measures of manufacturing activity in the US due to the concentration of manufacturing in the Chicago region.  Analysts expect the report to be flat—but maintain its current high level.  As for Consumer Confidence, analysts expect it to surge even higher from current readings signaling that the important consumer sector of our economy is becoming more confident with each passing month in the long term prospects for the economy and for themselves.

    Markets are also encouraged by progress toward more significant fiscal controls in the European Union today.  25 of the 27 member states, currently excluding only the UK and the Czech Republic, have signed a new treaty which would impose severe penalties on any nation that fails to meet established guidelines for fiscal discipline.  This of course relates most directly to Greece currently, but will impact other member states as the year progresses.

    The US stock market is getting close to what is known as the “golden cross”.  This is a technical indicator that describes when the 50-day moving average in the S&P Index crosses the trend line for the 200-day moving average.  This is historically viewed as a bullish sign for the markets.  In this particular case however it is the decline in the 200-day average that is leading to the event rather than the rise in the 50-day average.  In fact, the S&P Index has been down for five of the previous six trading sessions.  This ought to take some of the positive energy out of this technical event.

    Nevertheless, good economic news today, progress in Europe and the “golden cross” may lead to a pause in the run of record low mortgage rates today.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  5. Mortgage Rates: Record Lows Daily?

    By on January 30, 2012

    Mortgage rates look to fall even lower today as a busy week for economic data gets underway.  On-going drama in Greece combine with the busy economic calendar to make this a crucial week for establishing the rate trend for 2012. So far, anyway, it looks like a positive trend for rates.

    The first big report of the week, the Personal Consumption and Expenditures report indicated that consumers pulled back on spending in December despite an increase in their income.  Most analysts are interpreting this as a sign of a slow-down ahead for early 2012. Once again I would urge caution in this interpretation.

    Annual consumer spending rose for 2011 by 4.7%, the largest margin in four years. A dip of .1% in the December expenditures portion of the PCE report, while breaking the string of three consecutive positive months, does not signal a trend reversal all by itself.  Particularly when you remember that the PCE report is adjusted for inflation.  According to the PCE’s own inflation component, prices increased by 2.0% rather than the 1.0% forecasted.  This largely accounts for the so-called “drop” in consumer spending.

    The never-ending Greek drama continues to play out.  Last week it was negotiations with private bond holders that dominated the scene.  After reaching an agreement with private bond holders to cut their payouts by 70% the attention now turns to how the remaining budget shortfall will be made up.  Will Greece be forced to cut spending further or will additional loans come from European nations and the ECB?

    Over the weekend the idea of installing a Eurozone budget overseer who would have the power to veto budget measures from Greece.  As you might imagine, that idea did not go over very well in Greece.  One official stated that such a measure would force Greece to choose between “financial assistance” and “national dignity”.

    The rest of the week will provide a great deal of additional economic data on the strength or lack thereof in the US economy. Chicago PMI (a gauge of manufacturing in the Chicago region) and consumer confidence reports will be released on Tuesday.  Wednesday provides the ADP Employment Change report along with construction spending and the ISM index (manufacturing).  Thursday’s key reports include the weekly jobless claims report and productivity report.  Finally, on Friday we will see the Non-Farm Payrolls report , Factory Orders and ISM Services.

    Current low mortgage rates are not justified by the economic data available to date.  Perhaps this week’s data will show developing weakness in the US economy and support the recent moves downward. Nevertheless, for the time-being consumers needing a mortgage for a refinance or purchase transaction can be comforted in knowing that rates have never been lower.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  6. Mortgage Rates: GDP Pushes Rates to Record Lows?

    By on January 27, 2012

    The first look at the US Gross Domestic Product for the 4th quarter of 2004 was the strongest in 1 ½ years.  And while news of economic strength usually sends mortgage rates higher today it appears to be sending them lower.  Why?  Because the expectations of economists prior to the report’s release was for even stronger growth.   Perhaps traders of stocks and mortgage-backed securities will realize that this data is hardly worth relying on for guiding their positions since this early look at GDP each quarter is often revised significantly before being finalized.  This report will be revised on February 29 and won’t be finalized until March 29.  According to the US Bureau of Economic Analysis, the group that produces the GDP reports the average change between the “Advance Estimate” and the “Final” is greater than 1.0%!  So despite the early improvement in mortgage rates this morning, consumers needing a mortgage for a refinance or purchase should not expect further moves down today.

    Reports out of Europe suggest that a deal between Greece and its private bond holders to reduce their payout is “very close”.  While I know we have heard this before—I actually believe it because these bond holders really have no viable alternatives.  Should they allow Greece to default in a disorderly manner it would put all their other European debt holdings at much greater risk as global investors would likely devalue all things European.

    At 10 AM ET today the January Consumer Sentiment report will be released.  Expectations for this report are for it to be flat—but flat at a very strong level.  Should this report surprise significantly it could move mortgage rates.  I do expect this report to come in close to expectations—or if there is a surprise for it to be to the high side.  If I am correct than the greater risk later today is for a slight uptick in mortgage costs rather further improvement.

    Have a great weekend!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  7. Mortgage Rates: Record Lows and The Arrogance of the Fed

    By on January 26, 2012

    In the hours since the Federal Open Market Committee of the US Federal Reserve issued its statement on monetary policy and its economic forecast I have been nagged by a sense that something just wasn’t right.  As I sat down with my coffee this morning to write this humble little blog which attempts to forecast the direction of mortgage rates over the next eight hours it hit me—the Fed forecast is an example of arrogant elitism that intends to manipulate market participants into actions that are simply not justified by the facts.

    Yes I know—they are smarter than I am.  But that is the problem.  Too often over the past four years, in response to what some call a failure of capitalism (I would call it a failure of morals—but that is a topic for another time and place), we have witnessed government officials, with the enabling of their academic sympathizers, propose “fixes” that pre-suppose some sort of divine knowledge that they simply cannot possess.  The belief that the “visible hand” of government and academia can effectively guide the “invisible hand” of the market is arrogance of the highest order.

    Fed Chairman Bernanke admitted as much in his press conference yesterday when he stated that the committee’s ability to forecast out to 2014 was severely limited. Then why would the only change they made to their statement from the previous statement be extending the commitment to “exceptionally low” interest rates to late 2014.  It is very simple—they are attempting to manipulate market activity.  I will grant the FOMC credit for efforts to foster transparency so that market participants can judge for themselves the likelihood of future Fed action.  But to add a pledge that is based on events that are well beyond their ability to forecast, is to assume power in the spirit of a benevolent dictator.

    All that being said mortgage rates are continuing to move to new record lows today despite economic reports that suggest the US economy is stronger than experts have forecast.  Durable goods orders increased at a higher rate than experts forecasted this past month.  Weekly jobless claims increased, but by significantly less than experts expected this week.  If we can’t accurately forecast a week or a month in advance, should the Fed be publicizing their three year forecasts?  I think you know my opinion!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  8. Mortgage Rates: QE III and Refinances for All?

    By on January 25, 2012

    Mortgage rates have opened flat today and will likely stay close to current levels up until the Federal Reserve statement release at 12:15 PM ET.  All possible results are then on the table as no information has leaked out of the Open Market Committee to signal their likely direction.  However, Fed statements can be somewhat confusing, so unless the words are absolutely clear, traders may wait until 2:15 PM ET when Fed Chairman Ben Bernanke holds a news conference.  Forecasting whether the Fed will propose more fiscal stimulus in the form of QE III is difficult to do.  My gut says they will but my heart hopes that they will not.

    One new wrinkle that is adding to the mix today are words from President Obama’s State of the Union speech last night.  Regarding housing the President said:

    “I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks.”

    With very few details provided by the President about how this program would work we are left to speculate.  Other news outlets have reported that sources suggest that the key difference in this plan is that it would apply to all mortgages, not just those owned by Freddie and Fannie.  Another difference is that this proposal would have to have Congressional approval to become law.  The Administration’s efforts to convince the managers of Fannie and Freddie to loosen requirements for refinancing further have failed because of the potential risks involved according to reports.

    What does this have to do with the Fed? One has to wonder if the President believed that the Fed was likely to drive rates down through QE III, which would stimulate refinancing on its own, if he would politically risk such a strategy to get this proposal through a divided congress? Perhaps he doesn’t know any more than we do and is simply positioning to argue that he “tried” to help homeowners.

    In addition to the Fed statement today one other economic report may impact the markets.  Pending home sales were down sharply from last month and much further than expectations.

    Mortgage rates could close the day meaningfully different than they are right now.  I wish I could tell you which way they will move but that decision is being made in conference room in Washington DC.  The speeches in the weeks up to this meeting by members of the FOMC would lead you to believe that additional stimulus has a good chance of being approved.  I hope that doesn’t happen.  It’s time for the US economy to be weaned from government intervention.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rates, Purchase, Refinance

  9. Mortgage Rates: Risk Ahead, Get off the Fence

    By on January 24, 2012

    Mortgage pricing is improving after early morning trading for mortgage-backed securities today.  This reverses a steady increase in mortgage pricing over the past several trading sessions due to strong economic news from the US and progress in the Greek debt negotiations.  Today with no economic news scheduled to be released in the US and reports that a proposed deal with private sector Greek bond holders has been rejected by European finance ministers, we see investors seeking safety in US MBS.

    Today’s move is likely temporary as tomorrow is a big day for US economic news with the statement by the Federal Reserve concerning potential new stimulus.  Moreover, despite the rejection by European finance ministers of the proposed deal on Greek debt, most analysts expect a resolution by next Monday when a European Summit will take place.

    The issue in Greece now is not whether there will be a default or not.  Greece will default.  S&P, the bond ratings company stated today that as soon as a deal is reached it will cut Greece’s debt rating to “selective default”.  The only questions to be answered no are whether the default will be orderly (according to terms negotiated with creditors) or disorderly (no new deal guaranteeing any payment to creditors).  Orderly default is certainly preferable as it will minimize the potential losses for creditors including major European banks.

    Periodically I will write that “today is a trader’s day”.  Today is just such a day.  The news does not suggest a clear reason for stocks and bonds to trade in one direction or another.  Often times on days such as this we see a reversal of most recent trends.  Remember, traders get paid regardless of the direction of the investment move, they simply get paid for placing the trades.  Investors also realize that without clear reasons to continue a trend the trend itself is at risk.  Consequently a mild change of direction often occurs until clarity comes to the market.

    Tomorrow will provide much clarity.  The Fed will either move forward with further stimulus or it will not.  Either way MBS markets will move tomorrow.  Consequently, if you are sitting on the fence considering whether or not to lock a mortgage rate for a purchase or refinance—today is a great day to get off the fence and lock.  Tomorrow may end up with better rates, but the potential for a big step up is also present.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  10. Mortgage Rates: Hold on, it’s Going to be A Bumpy Ride

    By on January 23, 2012

    Mortgage rates will likely see some meaningful change this week with important events going on both in the US and Europe.  Early market activity this morning has already shown the volatility that is in store for us this week.  With the mortgage-backed securities market open less than an hour traders reacted to a statement by a German Finance official and MBS prices declined sharply likely resulting in initial mortgage pricing this morning heading higher. With European finance ministers meeting today and the US Federal Reserve’s Open Market Committee meeting this week, it could be a bumpy ride.

    Somewhere around 9:15 ET this morning comments from a German Finance official that they were discussing running the European Financial Stability Facility and the European Stability Mechanism simultaneously.  This approach to the two bailout tools created in Europe would theoretically put more bonds into the market, thus creating more competition for MBS and lowering their demand.  Whether this comes to pass or not is uncertain, yet it was sufficient to cause a 5/32 drop in MBS value.  Traditionally, a 4/32 change in MBS prices is sufficient to move mortgage pricing to the retail consumer.

    Two events in the US this week have also added to the sense of uncertainty in the markets.  First and most importantly, the meeting of the Federal Reserve’s Open Market Committee will begin tomorrow and culminate Wednesday with their statement and a news briefing.  Additionally, for the first time in history the Committee will publish the future interest rate forecasts of each of its members to try to give more clarity into the speculation over the group’s likely moves in the future.  However, this meeting’s intrigue centers on whether the FOMC will institute a new round of quantitative easing or not.  Economists are split virtually 50/50 on this question.

    Secondly, there are rumors that President Obama may make announce some major initiatives for the housing market in his State of the Union speech to Congress Tuesday night.  Exactly, what these initiatives might be is unknown.  Speculation includes a massive rental initiative and also further efforts to assist borrowers (unemployed and veterans for example) to avoid foreclosure.

    Other rate influencers this week include Thursday’s Durable Goods report and jobless claims report and Friday’s first look at the US Gross Domestic Product for the 4th Quarter of 2011.

    Hang on tight!

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

LOOKING TO BUY OR REFINANCE?

Or Call us at 877-868-2503