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Mortgage Rates Back to 2017 Lows on Trump Tweet
Posted on Wednesday August 16, 2017

Mortgage rates dropped today after news broke (first rumors, then confirmation via Twitter) that President Trump was disbanding his councils of CEOs.  The move apparently came in response to attrition among several CEOs following Trump's press conference on recent events in Charlottesville, VA.  In not so many words, Trump disbanded the councils before any more CEOs had a chance to quit.  

Political turmoil--especially that which appears "anti-business" in any way--always runs the risk of hurting stocks and helping bonds.  That's exactly what happened today.  "Helping bonds" in this context means higher demand for bonds among investors.  Excess demand for bonds pushes rates lower.  

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Rates Rising as North Korea Talks Baseball
Posted on Tuesday August 15, 2017

Mortgage rates continued higher today as markets reacted to news that North Korea would tactically abstain from launching nuclear weapons at Guam because it was having such a good time watching the "foolish and stupid conduct of the Yankees."  Perhaps Kim Jong Un is a Sox fan?  Someone should tell him that series is over and that the Mets might not put up as much of a fight.  

Or perhaps "Yankees" referred to America in general.  Either way, markets took solace in the absence of global nuclear war by buying stocks and selling bonds.  Net selling pressure in bonds pushes rates higher.  Strong economic data in the morning only added to bond market weakness.

...(read more)

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Mortgage Rates Up Slightly From Long-Term Lows
Posted on Monday August 14, 2017

Mortgage rates rose moderately today as weekend news headlines suggested some measure of de-escalation of nuclear tensions between the US and North Korea.  To be sure, the news wasn't resoundingly conciliatory, but investors took solace in it nonetheless.  

In general, when headlines suggest the world is less likely to end by Monday, investors will be slightly more risk tolerant.  One expression of risk tolerant trading in financial markets is to favor something like stocks as opposed to bonds.  If there is net selling pressure on bonds, it creates net upward pressure on interest rates.  This was the case this morning.

...(read more)

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Mortgage Rates Uninspired at 9-Month Lows
Posted on Friday August 11, 2017

Mortgage rates held near the lowest levels since November 2016 today, after a key economic report showed subdued inflation.  The Consumer Price Index (CPI) is one of the most important metrics relied upon by the Fed when it comes to measuring the impact of its policies.  In general, if inflation is increasing or running higher than expected, the Fed will be more inclined to raise rates.  Although the Fed Funds Rate doesn't directly impact mortgage rates, anything that increases the likely pace of Fed rate hikes would also tend to push mortgage rates higher.

...(read more)

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Mortgage Rates Hold 2017 Lows Despite Market Volatility
Posted on Thursday August 10, 2017

Mortgage rates remained in line with 2017's lows today, despite noticeable improvement in underlying bond markets.  Under normal circumstances, bond market improvement equates fairly directly with mortgage rate improvement, but things aren't exactly normal lately.  

On the simplest level, the timing of market movements over the past 2 days tells the story.  The prices of mortgage-backed-securities (MBS) are right in line with those seen yesterday morning when most of yesterday's rate sheets came out.  Bonds and MBS weakened yesterday, but not enough for most lenders to change rate sheets before the end of the day.  In that sense, today's bond market strength allowed for lenders to keep rate sheets unchanged whereas rates would have been slightly higher had bonds been flat on the day.  

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New 2017 Lows for Rates, But There's a Catch
Posted on Wednesday August 09, 2017

Mortgage rates fell to new lows for the year today, following the North Korea nuclear threat headlines.  In truth, the preceding sentence gives too much credit to geopolitical risk.  Rates were already drifting very close to the lowest levels since the election, even before yesterday's news broke.  Additionally, the improvements are still too small to be translating to NOTE rates themselves (the actual interest rate applied to your loan balance).  Instead, it's the upfront costs that are allowing for fine-tuning adjustments.  (This means the EFFECTIVE rate is changing, but not the NOTE rate.)

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Mortgage Rates Still Struggling to Make Bigger Moves
Posted on Tuesday August 08, 2017

Mortgage rates moved microscopically lower today, keeping them in line with the best levels in more than a month.  The caveat is that there really hasn't been much change during that time, so we're measuring very small differences in average upfront costs among multiple lenders.  This may or may not translate directly to any given scenario, depending on the lender.  

Bond markets (which underlie mortgage rates) are having a hard time making improvements past several key levels.  It's easiest to observe this inertia around 10yr Treasury yields of 2.22 and 2.25%.  On the stronger few days seen at the end of last week, yields challenged 2.22%.  So far this week, however, they've been unable to break below 2.25%

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Mortgage Rates Unchanged vs Last Week
Posted on Monday August 07, 2017

Mortgage rates were generally unchanged today, compared to Friday afternoon's latest levels.  Only a handful of lenders responded to strength in bond markets this afternoon by offering rate sheet improvements.  That's a mixed blessing as it leaves other lenders with more to work with tomorrow.  In other words, we'll be heading into the day with a small comparative advantage.  That means if bond markets (which dictate rates) haven't moved much by tomorrow morning, most lenders should be able to offer improved rates.

A caveat for all of the above is that we're talking about extremely small movement in the bigger picture.  The overall range has been exceptionally narrow, and most clients aren't likely to have seen any changes to their quoted interest rate in more than a week.  Instead, changes would be seen in the upfront costs, which allow for smaller fine-tuning adjustments to overall financing costs.

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Mortgage Rates Tick Up After Jobs Report
Posted on Friday August 04, 2017

While it was far from a dramatic move mortgage rates ticked slightly higher after today's Employment Situation data, otherwise known simply as "the jobs report" or NFP (due to its headline component: nonfarm payrolls).  On average, over time, NFP is the biggest market mover there is when it comes to economic reports.  It's no surprise to see bond markets (which underlie mortgage rates) react.  That said, today's NFP didn't necessarily warrant a reaction.  Or rather, today's numbers could have gone either way based on past precedent.  The problem today was that market participants were generally positioned for the report to come out slightly weaker than forecast.  Instead, it came out slightly stronger (209k new payrolls were added in July versus estimates of 183k). 

...(read more)

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Mortgage Rates Lowest in Just Over a Month
Posted on Thursday August 03, 2017

Mortgage rates moved just slightly lower today, bringing them to the best levels in over a month for the 2nd time this week.  While that sounds somewhat impressive, day-over-day movement has been very small and the overall range has been very narrow during that time.  For most prospective borrowers, a scenario quoted last week would be at the same rate this week, but with lower upfront costs.  Indeed, it's possible that a few quotes have moved .125% lower over that time, but upfront costs would likely be somewhat higher.  

Here's how the info above would break down specifically.  Borrowers being quoted the same rate vs last week are looking at an average upfront cost savings of roughly 0.3%, or $300 for every $100,000 borrowed.  Clients being quoted the next rate lower (in 0.125% increments) are looking at average upfront cost increase of roughly the same amount.  That $300 in upfront cost is worth roughly 7 bucks a month.

...(read more)

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