Mortgage rates can seemingly do no wrong this week. They fell again today–this time making it firmly into territory not seen since late April. At current levels, many lenders have moved on to quoting conventional 30yr mortgage rates well below what I was able to give most of my past clients.
Today’s improvements, and indeed some of the improvements earlier this week have NOT been captured by Freddie Mac’s weekly Primary Mortgage Market Survey–the industry standard for mortgage rate tracking. While the survey is highly accurate over the long haul, its methodology doesn’t allow it to capture all of the movement in any given week. In fact, the only rate sheets that inform the survey response are those that come out on Friday afternoon through Wednesday morning. Moreover, the survey responses tend to arrive more toward the beginning of the week. That means if things are moving fairly quickly over the course of the week, Freddie’s survey will be a bit behind the curve.
There’s nothing good or bad about the lag in the Freddie Mac data. It’s a valuable resource that just happens to be a bit too ‘wide-angle’ for the average borrower or originator seeking the most up-to-date information on rates. I only bring it up because almost every major news outlet relies on the Freddie report for its official weekly article on mortgage rates. Today, those articles will be saying there hasn’t been much of an improvement over last week, and it’s important you know that’s no longer the case.
This is a timely piece of information as well, because tomorrow brings the important Employment Situationreport (aka “jobs report, nonfarm payrolls, or NFP”). This is the biggest piece of economic data that comes out each month and it has the greatest potential to cause movement in the bond markets that dictate mortgage rates. With rates at 5-month lows and even a 50% risk of a big bounce higher, it’s even harder to make a caseagainst locking today. Granted, risk-takers could be rewarded if the report is exceptionally weak, but even then, we have to consider that rates can sometimes bounce higher simply because they’ve gotten tired of moving consistently lower. We’re not quite to the point where that’s an imminent risk regardless of the data, but certainly, an equivocal jobs report wouldn’t make any strong arguments for rates to continue lower.
Mortgage rates moved moderately lower yet again. This extends a winning streak that began on July 14th, making it the longest positive trend in 2015. If this seems paradoxical in light of everything you may have heard about the Fed hiking rates this year, that’s normal. Market participants and pundits have a long history of getting too attached to a certain idea only to be punished by markets for the imbalance.
Mortgage rates moved lower today at their fastest pace since January 14th. Rates sheets moved well past recent lows and back to levels not seen since May 10th 2013. That was the day that the Wall Street Journal’s Hilsenrath suggested the Fed was mapping an exit from stimulus, which sent markets into the tailspin that was effectively the prologue to the taper tantrum. It’s amazing, or at least interesting to consider that asset purchases have now been fully phased and that a rate hike is a much more immediate threat, yet rates are back to where they were before markets really began adjusting for all that “stuff.” That’s the power of global economic turmoil and a troubling lack of inflation for core economies.
The specific result today is the greatly-increased prevalence of 3.5% as a conforming 30yr fixed quote for top tier scenarios. 3.625% is ubiquitously available, but again, keep in mind that these rates refer to top tier scenarios with 25% equity or more, and high credit scores among other things. The important part is the day-over-day change and the relationship to recent levels. In other words, no matter what you were quoted in the past few weeks, if your scenario is the same, today’s rates are better.
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January 16, 2015
Mortgage rates continued moving aggressively lower this week, largely because broader bond markets moved even more aggressively lower. In fact, in that sense, mortgages had a hard time keeping up, and that ultimately helped them hold their ground on Friday when broader markets finally underwent a correction.
Friday aside, the net effect is what’s important here. Rates are back in the range that prevailed during the “golden era” from mid 2012 to mid 2013 when the most prevalently quoted conforming 30yr rates stayed between 3.125 and 3.625% for top-tier borrowers.
2015 continues to live up to its promise of volatility, and next week could be the wildest yet. Unfortunately, volatility goes both ways. The long term trend has certainly been positive for fans of low rates. And while there’s no reason that can’t continue, there’s also never a guarantee.
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January 13, 2015
Mortgage rates fell only modestly today, but it was enough for the best rate sheets since mid-May 2013. That’s a new 20 month low, on average.
Once again, there were no meaningful events on the economic calendar to motivate market movements. Instead, the bond markets that dictate mortgage rates were simply along for the ride as other sectors underwent more volatility. Like yesterday, this was most noticeable in equities markets (stocks). While rates won’t always be falling when stocks are falling, the bigger the movement becomes in one, the more likely the other will be affected. Today’s movement in stocks was big enough that bond markets couldn’t help but trade sympathetically.
Because of this, bond markets were near their best levels of the day in the afternoon when stocks hit their lows. This resulted in widespread positive reprices from mortgage lenders. As such, the average morning rate sheet wasn’t quite as strong as yesterday, but the average afternoon rate sheet is slightly stronger. CNBC has even caught on to the mortgage buzz. You can watch a great video report at their Debt site from Kellie Grant.
Rates have certainly been trending lower since the beginning of 2014. That trend has much to do with Europe, and until the trend in European economic concerns reverses, the trend in rates is likely to continue. The tricky part is that the reversal could begin at any time and we wouldn’t really be able to identify it without some hindsight. Coming up in the middle of the night tonight, Europe will get an important piece of news in the form of a court ruling that will speak to the European Central Bank’s ability to stimulate the economy as it sees fit. While it could just as easily result in very little drama, this is one of those periodic events that has the potential to cause current trends to accelerate or seemingly reverse course. That makes floating more risky in the short term.
Reach out to me today for a free review of your current mortgage, a good faith estimate for your existing home purchase or to get more info on these great rates. – Oliver Orlicki
The most prevalently quoted rates for top tier borrowers seeking conforming 30yr fixed loans (best-execution) fell from 3.875-4.0%down to 3.75-3.875%.
Mortgage rates finally saw some balanced volatility this week. Each of the past 2 weeks had either been decisively positive or negative. This week ended up being both.
Things started strong with new 19-month lows on Monday and Tuesday. The next 2 days brought a sharp turn in the other direction surrounding the FOMC Announcement.
The week in review is below. Make sure to check in next week for your weekly mortgage report.