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 →

Mortgage Rate Recap and Outlook for the Week Ending November 22, 2019

The effect of the Hong Kong protests (compounded by the judiciary’s stay on the mask ban) may not be as forthcoming immediately. Yet, it has what it takes to derail even the German and the US economy to some degree. It does not augur well for a US economy already being hit by the Trade War. The protests in Hong Kong (a Special Administrative Region of China) may well have brought the US Treasury down last week, thus bringing the 30 Yr Fixed below 4%. Mortgage Rates: Rates Decrease across the Platform This…continue reading →

Mortgage Rate Recap and Outlook for the Week Ending November 15, 2019

When the bond yield curve had inverted in late August, the USA began to harbor recessionary fears. These fears have since diluted; a trend reflected by a slight increase in the mortgage rates over the last couple of months. America's manufacturing sector is still under the pump and this creates an atmosphere of economic weakness. At such times, investors may rush for bonds thereby decreasing bond yields and bringing down interest rate along with it. Of course, if it turns out this way, mortgage shoppers will feel a little more confident about their…continue reading →

Mortgage Rate Recap and Outlook for the Week Ending November 8, 2019

At the time of writing this piece, we await the University of Michigan's Consumer Sentiment Index. It is expected to rally close to 96. Mortgage shoppers will have their eyes glued to it. It is worth noting that the higher the number, the more optimistic the consumers are and hence more likely to make purchases in the near future, the situation clearly affecting the mortgage rate. Mortgage shoppers will hope for their greater good that the index doesn't rise past October's 95.5 MortgageRates: rates decrease across the board This week’s Mortgage Banking Associations’ (MBA) weekly rate survey reveals…continue reading →

Mortgage Rate Recap and Outlook for the Week Ending October 30, 2019

Manufacturer sentiment has grown in October according to ISM's October Manufacturing Index but the reading of 48.3, despite being an uptick on September's 47.8, is still below 50 (chief wreckers being weak global growth cues, appreciated dollar and trade skepticism). This, though, spells good tidings for the mortgage market. With over a decade of following economic expansion, one expects the labor market to rally. And while the October percentage may not be as good as recent times, adding 128,000 new jobs and posting 3.6% unemployment rate is applaudable (and, in fact, beyond expectation),…continue reading →

Mortgage Rate Recap and Outlook for the Week Ending October 23, 2019

Call it the rise of the Planet Automaton, or simply, lack of productivity but wage growth (and it has foxed economists) is sluggishly seen in the light of the low unemployment rate. This is the exact opposite of how the cookie is supposed to crumble in times of expansion.    Federal spending (up by 8% for Fiscal ‘19’) has overrun an increase in revenue (up by 4%), leaving our country with a shade under a $1 trillion fiscal deficit. Never in the last 7 years has the budget gap been so wide. The…continue reading →