Mrtgage Rates November 1, 2013

Mortgage Rates Fly Holding Pattern Just Over 4 Percent

by Matthew Graham

Mortgage rates continued flying their recent holding pattern just over 4 percent.  Most lenders' rate sheets were essentially unchanged compared to yesterday's latest.  Additionally, we never saw enough bond market movement during the course of the day to justify any mid-day changes.   The most prevalent Conforming  (best-execution) has been pinned to 4.125% with very little change in associated closing costs for a week now.

Because most lenders adjust rates in 1/8th (0.125%) increments, the next time the best-execution quote moves lower, 30yr fixed rates will be back at 4.0%.  Some lenders are offering that now, but it's not the norm, and may involve additional closing costs. 

So is it possible that we'll see a more broad-based move down into the high 3's?  In a word, yes, but caveats apply.  The concept of a "holding pattern" is carefully chosen because rates are indeed circling the runway, waiting for permission to land.

That permission can only be granted by economic developments that are "negative enough."  Specifically, markets would need to see more evidence that the labor market is weak enough to unequivocally delay the Fed's timeline for reducing its bond buying program–one major factor in lower rates overall.

The surest bets when it comes to such data are the once-a-month Employment Situation Reports, such as last Tuesday's.  Due to shutdown rescheduling, the next report is coming up next Friday!  Even tomorrow, we'll get several pieces of data that will help decide the fate of the "circling plane," including the ADP Employment numbers which attempt to forecast next Friday's numbers.  The FOMC releases a policy announcement in the afternoon, and although traders agree we're not likely to see any policy change that hurts rates, it could still make for an afternoon where rates are actually higher or lower than the past afternoons.

 

Loan Originator Perspectives

 

"Still within a confined range, safe to say tomorrow will bring a bit more to the table however the recent trend prevails. Floating appears to be safe, however with rates at multi-month lows, locking must be considered. Tomorrow's FOMC is key to any volatility, not expecting anything groundbreaking. Float on!" –Constantine Floropoulos, Quontic Bank

"Consumer confidence readings released today were the lowest since April, likely not a surprise given recent DC dysfunction. The 5 year Treasury auction came in as expected. Net result was a range bound, but slightly higher day for MBS. Tomorrow's Fed Minutes should provide interesting details on their perspective on shutdown's impact on the economy. Any pro/con tapering hints will certainly impact rates' future direction." –Ted Rood, Senior Originator, Wintrust Mortgage

"Rates remain the the low 4% range (check with your Loan Originator on your specific scenario). Lock if you like. You can not lose by locking a rate you are comfortable with." –Bob Van Gilder, Finance One Mortgage

"I think the big question is will rates dip below 4%. I feel they will and possibly next week. We'll have to see, but the economic data I believe will confirm a slowing economy which should push rates down. Home sales numbers continue to disappoint. That's the last thing the FED wants." –Mike Owens, Partner, Horizon Financial Inc.

Curious about current mortgage rates? Give us a call, text or email. We would love to talk with you about your mortgage rate questions!

-Steve and Sandra

Steve Hill and Sandra Brenner
Windermere Real Estate/FN
122502 Greenwood Ave N
Seattle WA 98133
call/text: 206-769-9577
email: stevehill@windermere.com

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Mortgage Rates October 3, 2013

Home Buyers: Window of Opportunity Still Open

The Fed recently announced they would continue their current pace of purchasing bonds until the economy was stronger. This bond purchasing program is the reason that mortgage interest rates are at historic lows. Rates began to increase over the last several months just on the anticipation that the Fed would announce that they would be reducing the level of bond purchases last month. When that didn’t happen, rates actually decreased (4.50 to 4.37).

That was great news for any buyer in the process of purchasing a home. However, this window of opportunity is expected to close in the very near future as most experts expect the Fed to taper the bond purchasers in December. Even Ben Bernanke, Chairman of the Fed, suggested that the Fed could still scale back the stimulus this year. He stated:

"If the data confirms our basic outlook, then we could move later this year.”

Where will mortgage rates head in 2014?

The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors have each projected that the 30 year fixed rate mortgage will have interest rates in excess of 5% by this time next year. The average of their four projections is 5.3%. The table below shows the impact this will have on the monthly principal and interest payment on a $250,000 mortgage:

Looking for a great home loan lender? Check out our recommendations below!

Steve Hill and Sandra Brenner
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BrennerHill.com
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Washington First Mortgage
WaFirstMortgage.com
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Cobalt Mortgage
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Mrtgage Rates September 23, 2013

Mortgage Rates after the Bernanke Announcement

Last week, Bernard Bernanke startled many by announcing that the Fed will not wind down their bond buying program right now. The program is part of an overall stimulus package geared at bringing back the national economy. The Fed’s purchase of these bonds over the last few years has driven mortgage rates to historic lows. The assumption that there would be a reduction in bond purchases has caused 30 year mortgage rates to spike upward over the last few months.

Surprisingly, Bernanke revealed the Fed will continue bond purchasers at the current pace. What happened and what does it mean to mortgage interest rates?

What would have happened if they reduced bond purchases?

According to Bankrate.com:

“The Fed could have caused rates to shoot up this week if it had announced the tapering of its bond-purchasing program.”

Why did the Fed decide not to start winding down bond purchases?

Moody’s Analytics reported that there were three reasons:

  1. Subpar economic data
  2. Tighter financial conditions
  3. Uncertainty surrounding fiscal policy

What does this mean to a buyer applying for a mortgage?

Those at Bankrate.com explain:

“For now, borrowers have dodged another spike in rates. The Fed’s announcement might even cause rates to drop in coming days, says Paul Edelstein, director of financial economics at IHS Global Insight.

‘Mortgage rates should fall back — not massively, but to some extent,’ he says.

That doesn’t mean homebuyers and homeowners should wait for lower rates, mortgage professionals say.

Eventually, once the Fed lets the mortgage market and the economy start walking on their own, rates will probably head back to the 5 percent or 6 percent range, says Scott Schang, manager for Broadview Mortgage Katella in Orange, Calif.”

When will the Fed begin winding down bond purchases?  

According to an article in the Wall Street Journal:

“Federal Reserve policy makers decided this week that the economy isn’t in the right place for them to start winding down their bond-buying program. By the time they meet in December, it might be.

The decision to not start winding down the bond-buying program now was close… The economy only needs to get a little bit better over the next few months for the central bank to get its nerve back. That should be an easy bar for the economy to clear.”

Bernanke himself has not ruled out that the Fed could still scale back the stimulus this year. He stated:

“If the data confirms our basic outlook, then we could move later this year.”

Bottom Line

Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, IL had a great quote in the Bankrate article:

“Remember that rates go up like a rocket and fall like a feather.”

Still, Bankrate.com itself probably put it best: Grab the gift before it’s gone!

Questions about home loans? Give us or one of our preferred lenders a call today!

Steve Hill and Sandra Brenner
Best In Client Satisfaction
Windermere Real Estate
BrennerHill.com
call/text 206-769-9577

Our Preferred Lenders

George Runnels
Washington First Mortgage
WaFirstMortgage.com
call/text: 206-604-4545

Jackie Murphy
Cobalt Mortgage
CobaltMortgage.com
call/text: 425-260-6834

Mortgage Rates September 17, 2013

30-year mortgage rate steady at 4.57%

WASHINGTON (AP) — Average U.S. rates on fixed mortgages held steady this week, hovering near two-year highs. But rates could change quickly next week when the Federal Reserve addresses its bond purchase program.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan was unchanged from last week at 4.57%, just below the two-year high of 4.58% reached Aug. 22.

The average on the 15-year fixed mortgage held at 3.59%. The two-year high of 3.60% was hit on Aug. 22.

Long-term mortgage rates have risen more than a full percentage point since May, when Chairman Ben Bernanke first signaled that the Fed could reduce its bond purchases this year. The purchases have been intended to keep long-term loan rates extremely low.

Most analysts expect the Fed to decide at its meeting next week to scale back its bond purchases.

Even with the recent gain, mortgage rates remain low by historical standards. But higher rates have spurred some homebuyers to close deals quickly and could slow the market's momentum if they continue to rise.

Mortgage rates have been rising because they tend to track the yield on the 10-year Treasury note. The yield has climbed 1.3 percentage points in the past four months as bond traders have anticipated that the Fed will slow its bond buying.

The 10-year note's rate was 2.92% on Wednesday, down from 2.97% Tuesday but up from 2.89% a week earlier.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for a 30-year mortgage rose to 0.8 point from 0.7 point. The fee for a 15-year loan was steady at 0.7 point.

The average rate on a one-year adjustable-rate mortgage fell to 2.67% from 2.71%. The fee declined to 0.4 point from 0.5 point.

The average rate on a five-year adjustable mortgage dipped to 3.22% from 3.28%. The fee was unchanged at 0.5 point.

Curious about mortgage rates or refinancing? Give us a call, we are happy to help.

Steve Hill and Sandra Brenner
Best In Client Satisfaction
Windermere Real Estate
BrennerHill.com
call/text 206-769-9577

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Washington First Mortgage
WaFirstMortgage.com
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Mortgage and Interest Rates September 3, 2013

Should I Wait for Interest Rates to Come Back Down?

Above is a graph of the movement of the 30 year fixed mortgage rate since the beginning of 2012.

Some buyers are waiting to see if interest rates will come back down before making a decision about buying a home. Though no one can guarantee where rates will be in a few months, we don’t believe waiting is a good strategy.

Most experts believe rates may actually move higher. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will continue to climb.

With home prices increasing and interest rates projected to also increase, the cost of buying a house could quickly increase rather dramatically.

If you are searching for today's best rates on home mortgages, give George Runnels at Washington First Mortgage a call, he can find you the best terms for new or refinancing a home loan. 206-604-4545

Curious about interest rates and how they can affect your purchasing power? Give us a call or text to learn more.

Steve Hill and Sandra Brenner
Best In Client Satisfaction
Windermere Real Estate
call/text 206-769-9577
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