Mortgage Rates

The overview for the week is that housing markets are weakening, growth in wages continues to be below expectations, and Saudi Arabia is in a negative spotlight over the killing of a critic of the Saudi Crown Prince. The stock market is experiencing significant volatility, which saw a gain of 547 points in the DJIA on Tuesday (half of the prior week's loss), but losses on Wednesday and today total 14 points more than the gain on Tuesday. So on top of last weeks -1007, the DJIA is down another 65 points so…

The Federal Reserve raised the Fed Fund overnight rate by one-quarter percent yesterday, as predicted. Commentary by Fed President Powell also indicted another increase will come at their December meeting. The markets expected this rate increase so minimal movement in the markets as a result. Further based on the commentary released from the Fed meeting yesterday, going forward the Federal Reserve Board is going to be more reactive and sensitive to market changes. Given this strategy, it's difficult to predict the timing of future rate hikes over the next two years. The Fed…

Everyone in the market for a mortgage loan thinks comparing the Annual Percentage Rate (APR) from competing mortgage companies is the way to choose the best loan. And it’s all wrong. At best, trying to understand what APR means and using it to find the best loan adds unnecessary confusion to the process of finding the right lender. And in the worse case, it gives you incorrect information. Here’s a simple explanation of what APR is, why it exists, and why it may not be helpful in choosing your mortgage. The Annual Percentage…

Mortgage rates have increased for the last three weeks, and there's a strong likelihood that they will continue on that path for the foreseeable future, and definitely for the next week. Earlier in the week, there was a sell-off in the market which was justifiable - so no correction is expected. The Fannie Mae 4% coupon is now at it's highest price in several years. Other significant economic data released was Jobless Claims 4-week moving average coming in at a new 50-year low; national median home price, now $264,800, makes 78 straight months…

The last three weeks delivered increasing mortgage rates and the coming week is shaping up to be a repeat. What's behind this negative break from the summer doldrums rates have languished in is a steady sign that inflation is substantially above the Feds target of 2%. The latest CPI 4-week average came in barely below expectations (2.7% vs. 2.8%), while jobless claims, at 208K, are at a 46 year low. The Fed released the latest version of the Beige Book this week as well, highlighting a stable outlook for the US economy, the…

The Federal Reserve uses PCE Index, Personal Consumption Expenditures, as their preferred measure of inflation, and it's now hit a 6-year high at 2.3%. The impact of an uber strong GDP (4.2%), combined with the 2.3% PCE Index, should be causing a sell-off in Mortgage Backed Securities (MBS) - but that's not happening right now. The markets have stagnated waiting for Trade agreements to be hammered out and signed. At this point, Canada is at the table with the U.S. and the possibility exists they will sign by Friday, August 31st.  Mexico already…

If you read the economic "tea leaves," interest rates should be much higher right now than they are given the combination of a booming US economy, the Feds back to raising rates, and inflation solidly above 2.0%. What's holding them steady? Uncertainty in the markets keeps money invested in the bond market - seen as a safe haven for investors when there is actual or potential turmoil expected to rock the markets. Right now there's plenty of that going around. The main issues spooking investors are the continuing effects of tariffs and threatened…

Without any market-moving economic reports, mortgage-backed securities continue to perform as they have for weeks, with no change in sight. The job market remains strong, with unemployment at historically low levels - as in 48 year low. The only event on the global front that has had an impact on the markets is the collapse of Turkey's currency, and that was a minor market mover. Although it did create some flight to safety into US bonds, there was no significant impact on mortgage rates (see the chart in the section below.) It's notable…

One of the first decisions home buyers are faced with during the mortgage process is knowing when it's the right time to lock in an interest rate. The easy answer is when the rates are at their lowest - but when will that be? Or did you already miss it? Trying to answer this question and getting it right can drive you a little bit crazy. Try to put mortgage interest rates into a little perspective. First, it's important to know a few things about mortgage rates: You can't lock in an interest…

August continues to deliver the same doldrums in economic markets that have been present the past three months. Most economic data continues to come in at expectation, producing little effect on the markets. Inflation is coming in at 2.7% year over year, which is above the Feds target rate of 2%. Expect to see inflation beginning to increase noticeably as trade tariffs start to impact consumer prices. Jobs continue to be a strong point in the US economic data points, with jobless claims at an adjusted 45 year low. Wages are not showing…