Interest rates remain low

Mortgage interest rates for buying a home on the Palos Verdes Peninsula decreased slightly this week. The following are excerpts from the newsletter on interest rates published by HSH Associates :

“A measurable decline in mortgage rates to close March held on this week, but it appears that underlying pressures are kicking mortgage rates back up at least a bit. In the current climate, the fact of the matter is, if the economic news isn’t universally dire it will be difficult for interest rates to stay at present levels, let alone decline.

Although Freddie Mac noted that 30-year FRMs did edge higher this week, the increase fell short of our expectations. Given that the yields on the influential 10-year Treasury rebounded pretty smartly off last week’s lows (as did secondary market quotes for fixed-rate mortgages), a larger bump in rates should have been seen. However it may be, at least for a short while, that lenders are absorbing some of this increase in order to take advantage of a sudden surge in refinance activity. From one perspective, it’s perhaps better to make more loans at a smaller margin than to make fewer at larger, but this sort of phenomena generally doesn’t last for long.

The U.S. economy is showing remarkable resilience, and there is every reason to believe that the current expansion will become the longest on record later this year. Interest rates are still at historically very mild levels, regardless of the bleating of the White House that they should be lower, and mortgage rates are far closer to historic lows than they were just a few months ago. With the Fed making soothing sounds about policy, and the drag from a sluggish global economy amid few concerns about inflation keeping market-based interest rates anchored we should be in a pretty neutral interest-rate environment for a fair period of time.

That said, if the data isn’t dire or increasingly dire it will be hard to see rates decline or even hold at rock-bottom levels. To the degree that the data is warmer, firmer or better (insert your choice of adjective here) interest rates and mortgage rates will tend to rise a bit. At the moment, we’d need an abundance of such positive data just to retrace some of the 2019 decline for mortgage rates, and while we still think that it will generally come, it will take a while to accumulate.

This week’s solid slate of data is just one plank, but one that is good enough to push rates off of recent bottoms. By our reckoning, we should have seen a bigger bump this week, but it didn’t show, making it more likely that a more outsized rise may come next week. Based on where the underlying pressure was at the end of the week, we think we’ll see a 7-8 basis point increase in the average conforming 30-year FRM that Freddie Mac will report next Thursday morning. It wouldn’t even surprise us at all if it was a little to the upside of that. Still, spring homebuyers are being greeted by favorable conditions”

The following are interest rate quotes from Allen Bond of Wells Fargo Bank:

Conforming

Loan Type MI Type Interest Rate APR
30-yr fixed Conforming 4.375% 4.407%
15-yr fixed Conforming 3.625% 3.702%

Jumbo

Loan Type MI Type Interest Rate APR
7/1 ARM Jumbo 3.375% 4.232%
30-yr fixed Jumbo 4.000% 4.000%
Information displayed is accurate as of 4/5/2019 12:37:14 PM (CT) and is subject to change without notice.

For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

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Interest rate outlook

The following are excerpts from the newsletter on interest rates published by HSH Associates :

The Fed certainly has a lot of shifting sand to ponder when it meets next week. In the current domestic and global economic climate, interest rates will have difficulty getting any kind of reliable upward traction. That said, the Fed has a bit of a difficult job when it comes to the message it releases Wednesday afternoon, as too optimistic an outlook risks confusing the market as to what and where they are seeing brightening skies, while too pessimistic an outlook would also roil markets, who would then start the drumbeat for the Fed to consider cutting interest rates sooner than later. Cautious optimism is about the best message they can convey, and we expect that’s what we’ll get.

There’s not much new data out before the Fed meeting, so markets won’t have much by way of additional clues to work with. With a soft fade for interest rates as the week came to a close, odds favor little change to mortgage rates in the coming days, but we might see a couple of basis point decline in the average offered rate for 30-year FRMs that Freddie Mac reports next Thursday

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Interest rates rise significantly

Mortgage interest rates for buying a home on the Palos Verdes Peninsula rose significantly this week. The following are excerpts from the newsletter on interest rates published by HSH Associates :

” It’s certainly hard to ignore the noise surrounding the biggest spike in mortgage rates since November 2013, let alone that the run up puts 30-year fixed-rates at more than seven year highs.

No one should be surprised that interest rates are rising, even though the speed or size of the move may have caught some off guard. Economic growth has been very strong for a while now, job growth continues apace, inflation has made its way back to the Fed’s desired levels, and the Fed itself is not only continuing on a path of raising rates and trimming its balance sheet but is no longer providing the kind of forward guidance it had been for years.

Interest rates moved higher because things are economically good; this week, concerns that ever-higher rates might diminish this economic goodness took its toll on stocks for a time, with multiple selloffs trimming more than 1,200 points off of the Dow Jones Industrial Average. Investors selling these relatively riskier holdings had cash in hand that needed to be put somewhere; the newly-higher yields on bonds looked attractive enough to pull in some of that cash, and this in turn chopped the top off of the rate spike. The yield on the 10-year Treasury peaked this week at an intraday value of 3.256%; by late Friday, it had shrank back to 3.158%.

Fixed mortgage rates do follow the yield on the 10-year Treasury, but it’s not exactly always a one-for-one move. The spread between the two often hovers around 160 basis points or so, but can certainly be more or less, depending upon investor demand for Treasuries relative to investor demand for Mortgage Backed Securities (MBS) and other forms of mortgage-related debt. As such, mortgage rates may move less (or more) than the Treasury note.

Mortgage rates around the 5% mark are still historically favorable, but this perspective is really little more than a conversation piece for older homeowners to kick around the backyard firepit. What matters now is the perspective of potential homebuyers. It’s unlikely that an 18-year old in high school back in 2008 cared much about mortgage rates, but a 28-year old wannabe homebuyer certainly cares now, and it may feel a little as though mortgage rates are the highest they can remember.

We won’t know for a couple of weeks if this week’s stock market rout and interest rate spike have affected consumer moods. However, the preliminary October University of Michigan survey of Consumer Sentiment did see as modest decline. The early review showed a 1.5-point decline in the overall indicator, which eased to a value of 99.0 so far this month; present conditions were judged slightly less favorably than they had been, with a 0.8-point decline to 114.4, and expectations for the future also dimmed just a bit shedding 1.4 points to slip to 89.1 so far this month.

Financial markets remain quite volatile and so even a short-term forecast for rates in the coming days must contain more than the usual level of caution. That said, the bulk of the spike in underlying rates took place more than a week ago now, was interrupted by a Monday market holiday but since then has been flagging, if in an ebb and flow pattern. We’re unlikely to quickly or easily return to start-of-October yields for the 10-year TCM, but do look to be starting next week at levels measurably below the recent peak. A busier week of data is on tap, including retail sales and some housing indicators, but it’s a fair bet that markets will be focused on the minutes from the last FOMC meeting, due out on Wednesday.

Based upon how financial markets closed this week, and with a grain or two of salt, we think there’s a good chance we’ll see perhaps a 5 basis point or so decline in the conforming 30-year FRM reported by Freddie Mac next Thursday.”

The following are interest rate quotes from John Alvin of American California Financial:

30 Yr Fixed FHA
Rate APR
4.250 5.395 Details

Conforming 30 Yr Fixed up to $453,100
Rate APR
4.875 5.002 Details

Conforming Jumbo 30 Yr Fixed $453,101 – $679,650
Rate APR
5.000 5.116 Details

Jumbo 30 Yr. to $1.5 Mil
Rate APR
4.625 4.722 Details

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate APR
4.125 4.683 Details

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For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

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Mortgage interest rates remain flat

Mortgage interest rates for buying a home on the Palos Verdes Peninsula stayed steady this week. The following are excerpts from the newsletter on interest rates published by HSH Associates :

” You probably wouldn’t know it, given all the “rising mortgage rates” headlines of the spring, but the reality is that mortgage rates have been fairly stable now for weeks. In fact, that’s been much the case overall since the end of April, when they cruised past the 4.5 percent mark. In the nine-week period since then, 30-year FRMs have held in just a 12-basis point slot with about as many weeks of decline as increase, and that despite an active Fed and faster economic growth and inflation.

Although it’s rather too soon to call it, but as we’re now at the start of summer, there seems a good chance that the summer doldrums for rates may start early this year.

For reasons hard to reckon, it just feels to us as though the factors that drove mortgage rates higher in the early part of the year faded to some degree in the last couple of months and continue to wane at the moment. This isn’t to suggest that mortgage rates are likely to fall; on the contrary, they are still much more likely to rise than decline, but there just doesn’t seem to be the same degree of upward pressure at the moment as there was in January, or March, or even May, for that matter. It simply feels as though a directionless period for rates has formed, and it isn’t clear what might cause a break higher if current influences can’t seem to make that happen.

As such, we think that rates will only wobble in place next week, with the average conforming 30-year FRM reported by Freddie Mac moving probably just a basis point or two, probably up.”

The following are interest rate quotes from John Alvin of American California Financial:

30 Yr Fixed FHA
Rate APR
4.000 5.141 Details

Conforming 30 Yr Fixed up to $453,100
Rate APR
4.500 4.624 Details

Conforming Jumbo 30 Yr Fixed $453,101 – $679,650
Rate APR
4.750 4.864 Details

Jumbo 30 Yr. to $1.5 Mil
Rate APR
4.625 4.722 Details

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate APR
4.000 4.562 Details

POSTED BY
For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

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Mortgage interest rates move down slightly again

Interest rates for buying a home on the Palos Verdes Peninsula stayed steady this week but the rate of increases is slowing and may decline slightly next week. The following are excerpts from the newsletter on interest rates published by HSH Associates :

” In recent weeks we’ve seen a number of economic conditions that have helped mortgage rates reverse course, at least a little. Of course, shaving about an eighth of a percentage point off a 61 basis point rise in 2018 isn’t much of a retreat, but homebuyers and even some refinancers in the market welcomed the chance at a slightly lower rate in the last couple of weeks.

A few factors have contributed to this minor decline: The Fed has so far expressed a willingness to let inflation run a little warmer than they would prefer for a time without a stronger policy response; oil prices have settled back for several weeks in a row after steadily rising for about three months, quelling concerns of faster inflation; trade and tariff issues plus unsettled politics and stumbling economies outside the U.S. have seen investors express their concerns by plowing money into the shelter of U.S.-backed bonds, driving yields down and pulling mortgage rates down along with them.

With the U.S. economy seemingly firing on all cylinders at the moment, and inflation at or perhaps now moving above its preferred target, the Federal Reserve will meet on Tuesday and Wednesday, with the expected outcome of the meeting including a lift in the Federal Funds rate. At the same time, Fed members will release updated expectations about near and far-term economic growth and inflation and projections for the future path of interest rates. While the expected interest-rate increase is “baked in” to today’s mortgage rates (futures markets place a 92% chance of the move), what isn’t known and will likely move the markets is whether the outlook for the rest of the year will suggest if two (or only one) additional rate hike can be expected. Members were split about 50-50 in March, and if more have moved into the “two move” camp we could see mortgage rates start heading back up before long.

 

 

 

Strong economic conditions, an active Fed and inflation chugging its way higher over time should be ingredients for higher interest rates and firming mortgage rates. However, as has been the case at times since the Great Recession, influences from other parts of the world have helped to keep them tethered or even pull them lower for a time. These transient influences are important for homebuyers and even refinancers as they get short windows to capture lower rates if they can move quickly, but the greater trend for now continues to suggest higher rather than lower rates as we go.

The Fed needs to continue along its path of raising rate if it hopes to be able to conventionally combat the next recession by lowering interest rates. In recent weeks, a consortium of economists are forecasting that the next recession may be as close as 18 months away, a sentiment echoed by none other than former Federal Reserve Chairman Ben Bernanke this week. A year and a half from now is a long way off, a lot can happen between now and then, and long-range forecasts of anything aren’t particularly trustworthy.

Neither are short range ones, for that matter. Last week we called for a five-basis point rise in the average conforming 30-year FRM as posted by Freddie Mac and instead got slapped by a two basis point decline. At the moment, the underlying current for rates is slightly firmer, but next week’s data and central bank activities suggest to us that some of the 12 basis point cumulative decline in rates is bound to go. As such, we expect a 3-4 basis point increase in the benchmark 30-year FRM when next Thursday’s report comes.”

 

The following are interest rate quotes from John Alvin of American California Financial:

 

30 Yr Fixed FHA
Rate APR
4.000 5.141 Details

 

Conforming 30 Yr Fixed up to $453,100
Rate APR
4.500 4.624 Details

 

Conforming Jumbo 30 Yr Fixed $453,101 – $679,650
Rate APR
4.750 4.864 Details

 

Jumbo 30 Yr. to $1.5 Mil
Rate APR
4.625 4.722 Details

 

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate APR
4.125 4.622 Details

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Mortgage rates edge downward slightly this week

Interest rates for buying a home on the Palos Verdes Peninsula stayed steady this week but the rate of increases is slowing and may decline slightly next week. The following are excerpts from the newsletter on interest rates published by HSH Associates :

“Mortgage rates rising in the 15 of the last 18 weeks coupled with steadily rising home prices are combining to make this a pretty quiet spring homebuying season. The average rate for the benchmark 30-year FRM edged higher again this week and has now risen by three quarters of a percentage point since last Thanksgiving.

As you might expect, this has literally crushed refinancing activity; according to the Mortgage Bankers Association, applications to refinance a mortgage have fallen to an 18-year low. However, given pretty solid economic and demographic fundamentals, rising rates weren’t supposed to have all that much effect on sales of homes, and likely wouldn’t, except that they have also come after years of steadily rising home prices.

To be fair, the tempering of existing home sales can also be attributed to a lack of supply of available and desirable homes to buy. However, but supply’s not so much the issue for new homes, where inventory can be added, but where higher starting costs and higher rates challenge affordability to an even greater degree.

The Fed expressing comfort with a greater level of inflation and not considering a stronger or faster policy response soothed the markets, and the underlying yields that influence mortgage rates declined measurably as the week progressed. The decline wasn’t reflected in this week’s Freddie Mac survey, but it will show up next week.

With the federal funds rate perhaps halfway to its terminal point (or at least closing in on it soon) the Fed is also looking to change the messaging it uses to describe the stance of monetary policy, so we’ll be watching for how their characterization of the position of interest rates changes in the coming months (perhaps as soon as next month).

After weeks of headlines of “Higher mortgage rates!”, there is a good chance that we’ll see a meaningful decline next week. The Fed’s unconcerned stance about even higher-than-desired inflation took a little edge out of interest rates for at least the moment. As well, some slowing in growth in the Eurozone and in Japan, a softening of oil price and other considerations also helped to press the yield on the influential 10-year Treasury down from about 3.07% to about 2.93% by the close of the week. A 14-basis point move is considerable, but not all of that passes down to mortgage rates… but some is likely to.

Memorial Day Monday means the unofficial start of summer… and the unofficial end of the spring homebuying season. April housing market wasn’t much to get excited about and odds favor that May won’t be either. As far as rates go, a little dip can be expected next week, perhaps enough to erase the five-basis point increase Freddie Mac reported this week or even a bit more”

The following are interest rate quotes from John Alvin of American California Financial:

30 Yr Fixed FHA
Rate     APR
4.000 5.141

Conforming 30 Yr Fixed up to $453,100
Rate    APR
4.500 4.624

Conforming Jumbo 30 Yr Fixed $453,101 – $679,650
Rate    APR
4.750 4.864 D

Jumbo 30 Yr. to $1.5 Mil
Rate     APR
4.500 4.596

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate    APR
4.000 4.562

For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

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Interest rates decline slightly

Interest rates for buying a home on the Palos Verdes Peninsula stayed steady this week but the rate of increases is slowing. The following are excerpts from the newsletter on interest rates published by HSH Associates :

“It would be hard to characterize a four basis point decline in the average 30-year fixed rate mortgage as meaningful, but the dip in rates this week was the largest since the turn of the year, so it’s at least notable, if nothing else.

The factors that produced the 2018 run-up in mortgage rates are all still largely in place, so the odds of a continued or substantial decline are still quite small. Tempering of the 2018 tendency for rates to climb comes in the form of highly-volatile stock markets, which continue to see investors looking for places to shelter cash, and some unexpected appetite among foreign investors for U.S.-backed debt.

With the economy humming, the Federal Reserve committed to a upward path for short-term interest rates (regardless of the actual number of moves that come this year) there is little likelihood that mortgage rates will decline by much from these levels. The influential 10-year Treasury put in a fairly volatile week, swinging from the low 2.70s to the low 2.80s before ending the week in the upper 2.70s range. Despite this, secondary market mandatory yields barely budged all week, so there appears to be a little disconnect between two correlated markets at the moment.

Mortgages and Treasuries serve different investors and liquidity profiles and risks of each are rather different. While yields and rates will generally move in tandem, it’s not correct to think they move in exact lockstep fashion. This is where we find ourselves at the moment, with highly volatile stock and bond markets but relative calm in mortgages, and that’s likely where will be come next week. There is slight downward pressure on rates as we write this late Friday, but it may or may not hold by the time Freddie Mac releases its survey results next Thursdaymorning. We think that a single basis point decline — perhaps two — is all that the volatility in Treasuries will be able to impart into mortgages next week.”

The following are interest rate quotes from John Alvin of American California Financial:

30 Yr Fixed FHA
Rate APR
3.750 4.887

Conforming 30 Yr Fixed up to $453,100
Rate APR
4.375 4.498

Conforming Jumbo 30 Yr Fixed $453,101 – $679,650
Rate APR
4.500 4.612

Jumbo 30 Yr. to $1.5 Mil
Rate APR
4.375 4.471

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)
Rate APR
4.000 4.562

POSTED BY
For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

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