Mortgage Rates Up After Falling for 6 Weeks

Having fallen below 3% for the first time since Freddie Mac started recording, the mortgage rates have risen above 3% once again, thus arresting a fall which began 6 weeks ago. At this point, it is only symbolic though. From 2.98% on July 16, we are at 3.01% (July 23). On the year-to-year chart, the 30-year fixed-rate mortgage traded at 3.75%. To quote Freddie Mac’s chief economist, Sam Khater, "While housing demand continues to rebound, the month-long swoon in economic activity has caused the 10-year Treasury benchmark to drop," He added, "In the…continue reading →

In a First, Mortgage Rates Fall Below 3%

For the first time in the last 50 years, the mortgage rates for the 30-year fixed-rate loan have come below 3%. Freddie Mac reveals that the rates sat at 2.98% for the week closing on July 16. On the year-to-year chart, it is a 22% decline.   Unsurprisingly, the rate drop has raised the demand for homes and the meager rates have been "capitalized into asset prices in support of the financial markets," divulges Freddie Mac's chief economist, Sam Khater. Things might still get tight though, thinks Khater, if the reemergence of Covid-19 cases…continue reading →

Strengthened by Refinance Volume, Mortgage Applications Shoot Up

The 5.1% week-to-week hike in mortgage applications has piggybacked largely on robust growth in the volume of refinancing. The MBA's Weekly Mortgage Applications Survey (for the week closing on 10th July) reveals that the refinance index has more than doubled on the year-to-year chart and shot up 12% on the week-to-week chart. The weekly result has been adjusted for the 4th of July.  From 60.1% a week prior, refinance levels have hiked to total application’s 64.2% this week. To paraphrase Joel Kan, the MBA's associate vice president of economic and industry forecasting, the…continue reading →

Record-High Home Equity Levels Left Unused in Q1

Despite exceedingly low interest rates, a very limited number of borrowers pulled cash out of their houses in Q1. This led to a record-high for the dollar value of usable home equity, reports Integrated Technology firm, Black Knight.  The mind goes back to the housing boom when homeowners tapped their equity to buy cars and fund vacations. When the market crashed, many such owners were left with no equity at all in their homes. There is enough evidence to believe that many still fear cash-outs due to the memory of those days. Cash-out…continue reading →

Housing Supply Shortage Hurts May Home Sales

May ‘20’ is not as encouraging for home purchases as May ‘19’ had been and we needn’t be told the reason for it. Closed transactions dropped by 3.9% compared to April and a mammoth 33.7% on the Year-over-Year chart.  Each housing market in the country has reported an annual drop in double figures (Iowa cutting the best picture with a 14.3% drop while Detroit the sorriest picture with a 64.8% drop). Inventory constraint hasn’t helped one bit. Housing supply in May is lowest since 2008. It has come down by 25% compared to…continue reading →

Ignoring Fed’s Moves, Mortgage Rates Climb to the Highest Levels in Nearly a Year

In 2008 Mortgage Industry largely caused the crisis that led to the Great Recession, in 2020 it's a mere innocent bystander that is getting beat. All kinds of asset markets (Mortgage Bonds, Treasurys, Stocks, even Oil, and Commodities) are in an unprecedented, unchartered territory where the traders have no clue what to do with them. Let's look at some numbers just in the last two weeks: VIX, which measures the volatility in the stock markets, rose from 13 to 75 (100 being the most volatile) The S&P 500 has dropped ~25% Oil prices…continue reading →

Breaking Down the Fed Announcement and its Impact on Mortgage Rates

Federal Reserve cuts rates to zero and launches a massive $700 billion quantitative easing program The Fed on Sunday said it will begin buying $200 billion of mortgage-backed bonds, a move that will stabilize and likely lower mortgage rates, which moved sharply higher last week. Fed also lowered the Funds rate to zero. So, when can you see a 0% rate on the mortgage statement? Probably - never. And that is because the Fed Funds rate has pretty much nothing to do with mortgage rates. This blog that I published last week goes…continue reading →

Mortgage Rate Recap and Outlook for the Week Ending December 13, 2019

Inflationary pressure at the producer level and the manufacturing level are feebler than expected (reading based on the Producer Price Index) and this means that the demand for bonds will keep the yield chained. This then is good tidings for the mortgage market. We should also be looking very closely at the Consumer Spending data. It may provide a different argument. Consumer Spending is directly proportional to the growth of an economy. Mortgage bonds, being long-term securities, increase in their appeal when the economy is feebly placed. To extrapolate, higher consumer spending may…continue reading →

Mortgage Rate Recap and Outlook for the Week Ending December 6, 2019

Fresh US-imposed tariffs will come into effect in China on 15th December. Both the economies may lock a small part of the deal before this date. As witnessed of late, bond markets are more reactive to the Trade War than any domestic news. If such a deal comes through, expectations around the reduction of tariffs will set the scene for negativity in the bond market. The mortgage market, then, can only be expected to be reactive. Mortgage Rates: rates offer a mixed bag This week’s Mortgage Banking Associations’ (MBA) weekly rate survey reveals a mixed performance across the…continue reading →

Mortgage Rate Recap and Outlook for the Week Ending November 29, 2019

Piggybacking on low mortgage rates, the refinance applications are on a rise. Refinance volume has pushed total mortgage volume up and it is nearly 150% above where it was, this week last year. The data, however, is not as reliable given that Thanksgiving fell a week earlier last year. To add, 30-Y fixed has come down by 1.15% over this one year period, boosting the present mortgage volume, and hence further skewing the Year-over-Year data. Be that as it may, there is certainly a cause for cheer. Mortgage Rates: rates decrease across the…continue reading →

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