WOW...Thank goodness for half days on the day before Thanksgiving. Otherwise I would have been in my office watching my hair fall out from the horrific performance of the bond markets. Rates increased a full quarter point (some lenders more) on Wednesday. We picked up some of those losses on Friday but not all of them. It will be interesting to see how this week plays out with regard to mortgage rates. I had chalked up the Wednesday ride to the usual near holiday trading day on Wall Street, but now I am not so sure. For those not familiar with the near holiday trading day, here you go:
Any day near a holiday is notorious among traders. First of all, lots of experienced Mortgage Backed Securities (MBS's) and stock traders take the day off. In general, December is year-end and many annual bonuses have been earned so there is little motivation to take risks or make moves. At the same time mortgage loan shoppers should know that there can be large desperation trades to recover losses or adjust balance sheets prior to year-end reporting. This can make for large and quick movements in rates. For the five weeks traders and investors tend to go along with the herd. Preservation of existing gains takes precedence.
I will post more later in the week regarding the movement of interest rates. As you can imagine the email inbox is quite full after a four day weekend!
Current rates are hovering around 4.25%-4.5% for the best qualified customers on 30 year notes.
Important Mortgage Rate Disclaimer: Loan originators will only be able to offer these rates on agency conforming loan amounts to borrowers who are have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording + escrows (things like upfront MIP (if required), property taxes, homeowners insurance, accrued interest)".
Monday, November 29, 2010
Wednesday, November 24, 2010
Happy Thanksgiving!
Well...that time of the year is officially upon us. Thanksgiving is tomorrow and that means Christmas is right around the corner. We have much to be thankful for here at Crystal Clear Mortgage. It has been a banner year for us and we owe it all to our customers and realtor partners. We give thanks to you this weekend, and our team of great associates that make it all possible. We are thankful for the troops that protect our freedom, and pray for their safe return from far away lands. We hope you and yours have a wonderful Thanksgiving and a safe one as well.
As far as mortgages go...Rates have been holding steady after a few days of rate increases. We are still seeing 30 year mortgage rates in the low 4's to mid 4's for the best qualified candidates. Historically speaking, still fantastic. Make sure to get pre approved before you start shopping for that home of your dreams. There have been a lot of changes to FHA loans and PMI guidelines. Please call us if you have any questions!
Adam Simmons
Crystal Clear Mortgage
888-634-6911
As far as mortgages go...Rates have been holding steady after a few days of rate increases. We are still seeing 30 year mortgage rates in the low 4's to mid 4's for the best qualified candidates. Historically speaking, still fantastic. Make sure to get pre approved before you start shopping for that home of your dreams. There have been a lot of changes to FHA loans and PMI guidelines. Please call us if you have any questions!
Adam Simmons
Crystal Clear Mortgage
888-634-6911
Wednesday, November 10, 2010
4th day in a row of rising rates
Interest rates have risen for the fourth consecutive day. QEII has come and gone and with almost no fanfare as predicted. The reason rates have not moved lower since the FED announcement is simply because the mortgage bond market had one trillion dollars already priced into it. When the FED announced 600 Billion in asset purchases it actually ended up being a disappointment to the markets and they are correcting their long term positions now. Here is some insight from Sigma Research:
Interest rates continue to increase; so far the fourth day in a row interest rates have climbed. The last three days the 10 yr note yield has increased 17 bp and mortgage rates up about the same; add in the decline so far this morning, the 10 off 23 bp and mortgage rates down 18 to 20 basis points. The bond and mortgage markets were expecting the QE move would drive rates down and the markets were heavily long, now we know QE 2 isn't going to push rates lower as widely expected and all those long positions are being closed out driving rates up quickly. Every technical indicator we apply to bond and mortgage markets are now bearish. The bond and mortgages markets opened weaker this morning but by 10:00 have re-gained the early losses
The QE decision by the Fed is being criticized heavily around the world as unnecessary and an attempt to drive the dollar lower to increase US exports. Many finance ministers are worrying over a currency war with nations moving to lower their currencies to accomplish the same thing the Fed is doing. Haven't heard this much strong criticism of a Fed decision in years.
I personally think that QEII was not needed and only served to further weaken our dollar as well as raise our debt levels. With rates already testing all time lows before the announcement, why was there a need to try and drive them lower? Do people really think 3.0% on 30 year fixed rate money is going to happen. I will be shocked if it does. However I do think we are seeing an over correction right now and a mortgage rate rally will probably happen in the next few days. This rally will not get us back to historic lows, but rates are still amazing!!
Please let us know if we can help in anyway!
Crystal Clear Mortgage
936-447-5626
Interest rates continue to increase; so far the fourth day in a row interest rates have climbed. The last three days the 10 yr note yield has increased 17 bp and mortgage rates up about the same; add in the decline so far this morning, the 10 off 23 bp and mortgage rates down 18 to 20 basis points. The bond and mortgage markets were expecting the QE move would drive rates down and the markets were heavily long, now we know QE 2 isn't going to push rates lower as widely expected and all those long positions are being closed out driving rates up quickly. Every technical indicator we apply to bond and mortgage markets are now bearish. The bond and mortgages markets opened weaker this morning but by 10:00 have re-gained the early losses
The QE decision by the Fed is being criticized heavily around the world as unnecessary and an attempt to drive the dollar lower to increase US exports. Many finance ministers are worrying over a currency war with nations moving to lower their currencies to accomplish the same thing the Fed is doing. Haven't heard this much strong criticism of a Fed decision in years.
I personally think that QEII was not needed and only served to further weaken our dollar as well as raise our debt levels. With rates already testing all time lows before the announcement, why was there a need to try and drive them lower? Do people really think 3.0% on 30 year fixed rate money is going to happen. I will be shocked if it does. However I do think we are seeing an over correction right now and a mortgage rate rally will probably happen in the next few days. This rally will not get us back to historic lows, but rates are still amazing!!
Please let us know if we can help in anyway!
Crystal Clear Mortgage
936-447-5626
Tuesday, November 2, 2010
Tomorrow Is the Day We have all been waiting for...
From our friends at Mortgage News Daily (they saay it a lot better than I can!):
Tomorrow is the day we've all been waiting for....
At 2:15pm, the Federal Open Market Committee (FOMC) will release their policy statement. At 2:15pm we find out if Quantitative Easing becomes a reality. At 2:15pm we find out if mortgage rates are destined to retest record lows.
Let's recap the "What If's" one more time...
If you're still a passenger on the float boat, it's because you made a decision to pass on rates below 4.25% in favor of a chance to lock in a rate below 4.00%. It's because you decided to PLAY THE RANGE UNTIL BERNANKE PLAYED YOU
On November 3, 2010 I anticipate the Federal Reserve will announce another Quantitative Easing program. This event is expected to lead consumer borrowing costs back down to record lows, which means we should see mortgage rates dip below 4.00% with much more attractive float down structures (in terms of how long it will take to recover points paid at closing).
FYI: This process might not be instantaneous, we might have to give lenders a few days to ease into rates below 4.00% again.
Do I think mortgage rates will go lower than 3.75% if the Fed announces QEII?
No I do not. Why don't I see rates moving below 3.75? Because I don't see 3.0 MBS trading in enough liquidity to allow lenders to offer rates below 3.75%. This is a bold prediction considering we don't know exactly what the Fed is plotting. If 3.0s do trade in size, lenders will be able to go as low as 3.25%
How long do I think QEII will keep mortgage rates at the record lows??
Long enough to lock your loan at record low rates!!! :-D
Unfortunately I can't provide an acceptable answer to that question yet, we just don't know enough details about the QEII program. We do however know that the Fed is looking to spark a little "Demand Pull Inflation" via "Cost Pull Inflation", and we also know inflation is the enemy of mortgage rates. While demand pull inflation won't ignite immediately, if the Fed's QEII plan is as successful as previous alternative policy strategies (which were intended to stabilize the economy, and they did), mortgage rates will eventually rise, and it will happen on the slightest hint of consumer led inflationary pressure or sustained job creation. I'm not even going to venture a guess on when that might happen though. Traders, economists, and analysts alike are still operating in a very reactive manner. Outlooks are constantly changing as the economic and political environments evolve. Let's see what the Fed says on November 3rd and go from there....
What if QEII is not what the market was expecting???
"Disappoints" is hard to quantify but I think there would be an initial period of selling that pushed the best par 30 year fixed mortgage rates at least back up to 4.375%. "At least" would imply the Fed announces QEII but it fails to inspire aggressive bond buying. In that case I still think we'd see mortgage rates touch record lows again sometime in months ahead, but I also think that would be a factor of the market losing faith in the Fed which would lead to a sense of panic and extra protectionism. This would be good for no one!
What if the Fed paints a much rosier picture of the economy and they say "no QEII for you"????
When the bond market gets overcrowded, which it still is, an event that shocks the herd would greatly increase the potential for snowball selling. The Fed deciding to delay QEII would be an event that "shocked the herd". If this scenario played out, the best par 30 year fixed mortgage rate would move at least up to 4.75%. This would reflect a lack of liquidity in the 4.0 MBS market.
We don't want that, we really don't want that. I don't think the Fed would let that happen either. They've over-telegraphed QEII. In none of my studies was I able to uncover a logical reason why the Fed would be planning a trick when we clearly expect a treat.
Waves of asset purchases are coming. And the size should be limitless (trillions = limitless) if the Fed really wants to spook wage earners into requesting a hike in their wage rate(bc of cost-push inflation). These asset purchases should also accompany a more accommodative tone in the FOMC statement. For example "rates will be low for longer than an extended period" (not how Ben would communicate but you get the point). This is an imperative part of the easing/debt monetization process. The Fed must send the markets a clear message that they fully intend to reflate the monetary base with inflationary policy. On a side note, I still believe the Fed will eventually encourage the designation of a resolution authority to mop up the overabundance of non-performing assets in the market. It's like Cancer, we gotta cut it out.
If QEII is not announced fence sitters are gonna be o.g "ticked off" and many loan officers are gonna be pointing their fingers directly at me! I'm cool with taking the blame though. I usually don't offer such direct lock/float advice, so when I do, and I do it consistently like I've done all week, you know I believe in it.
Patience is counting down without blasting off....
2:15pm.
Tomorrow is the day we've all been waiting for....
At 2:15pm, the Federal Open Market Committee (FOMC) will release their policy statement. At 2:15pm we find out if Quantitative Easing becomes a reality. At 2:15pm we find out if mortgage rates are destined to retest record lows.
Let's recap the "What If's" one more time...
If you're still a passenger on the float boat, it's because you made a decision to pass on rates below 4.25% in favor of a chance to lock in a rate below 4.00%. It's because you decided to PLAY THE RANGE UNTIL BERNANKE PLAYED YOU
On November 3, 2010 I anticipate the Federal Reserve will announce another Quantitative Easing program. This event is expected to lead consumer borrowing costs back down to record lows, which means we should see mortgage rates dip below 4.00% with much more attractive float down structures (in terms of how long it will take to recover points paid at closing).
FYI: This process might not be instantaneous, we might have to give lenders a few days to ease into rates below 4.00% again.
Do I think mortgage rates will go lower than 3.75% if the Fed announces QEII?
No I do not. Why don't I see rates moving below 3.75? Because I don't see 3.0 MBS trading in enough liquidity to allow lenders to offer rates below 3.75%. This is a bold prediction considering we don't know exactly what the Fed is plotting. If 3.0s do trade in size, lenders will be able to go as low as 3.25%
How long do I think QEII will keep mortgage rates at the record lows??
Long enough to lock your loan at record low rates!!! :-D
Unfortunately I can't provide an acceptable answer to that question yet, we just don't know enough details about the QEII program. We do however know that the Fed is looking to spark a little "Demand Pull Inflation" via "Cost Pull Inflation", and we also know inflation is the enemy of mortgage rates. While demand pull inflation won't ignite immediately, if the Fed's QEII plan is as successful as previous alternative policy strategies (which were intended to stabilize the economy, and they did), mortgage rates will eventually rise, and it will happen on the slightest hint of consumer led inflationary pressure or sustained job creation. I'm not even going to venture a guess on when that might happen though. Traders, economists, and analysts alike are still operating in a very reactive manner. Outlooks are constantly changing as the economic and political environments evolve. Let's see what the Fed says on November 3rd and go from there....
What if QEII is not what the market was expecting???
"Disappoints" is hard to quantify but I think there would be an initial period of selling that pushed the best par 30 year fixed mortgage rates at least back up to 4.375%. "At least" would imply the Fed announces QEII but it fails to inspire aggressive bond buying. In that case I still think we'd see mortgage rates touch record lows again sometime in months ahead, but I also think that would be a factor of the market losing faith in the Fed which would lead to a sense of panic and extra protectionism. This would be good for no one!
What if the Fed paints a much rosier picture of the economy and they say "no QEII for you"????
When the bond market gets overcrowded, which it still is, an event that shocks the herd would greatly increase the potential for snowball selling. The Fed deciding to delay QEII would be an event that "shocked the herd". If this scenario played out, the best par 30 year fixed mortgage rate would move at least up to 4.75%. This would reflect a lack of liquidity in the 4.0 MBS market.
We don't want that, we really don't want that. I don't think the Fed would let that happen either. They've over-telegraphed QEII. In none of my studies was I able to uncover a logical reason why the Fed would be planning a trick when we clearly expect a treat.
Waves of asset purchases are coming. And the size should be limitless (trillions = limitless) if the Fed really wants to spook wage earners into requesting a hike in their wage rate(bc of cost-push inflation). These asset purchases should also accompany a more accommodative tone in the FOMC statement. For example "rates will be low for longer than an extended period" (not how Ben would communicate but you get the point). This is an imperative part of the easing/debt monetization process. The Fed must send the markets a clear message that they fully intend to reflate the monetary base with inflationary policy. On a side note, I still believe the Fed will eventually encourage the designation of a resolution authority to mop up the overabundance of non-performing assets in the market. It's like Cancer, we gotta cut it out.
If QEII is not announced fence sitters are gonna be o.g "ticked off" and many loan officers are gonna be pointing their fingers directly at me! I'm cool with taking the blame though. I usually don't offer such direct lock/float advice, so when I do, and I do it consistently like I've done all week, you know I believe in it.
Patience is counting down without blasting off....
2:15pm.
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