Mortgage rates for April 23rd, 2019 will start the day on a positive note despite inflation pressures from the rising price of oil. The relationship between higher oil prices and higher mortgage rates is fairly simple to understand: Higher oil prices can increase the costs for businesses to operate. To cover the increases in costs to operate businesses then increase prices their customers pay which then pushes inflation higher. So higher inflation expectations results in mortgage bonds selling off which then pushes consumer mortgage rates higher.
At the beginning of the month the major concern for mortgage rates in April was the possible resolution to the trade war between the United States and China. As the price of oil moves higher that too also becomes a major concern for mortgage rates moving forward.
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Mortgage Backed Securities and Treasury Snapshot:
Mortgage Backed Security FNMA 4.0 started the day at 102.36, and FNMA 3.5 was at 100.58. The 10y Treasury yield opened the day at the 2.59% level.
As the 10y yield continues to trade below the recent highs (2.62%) we begin to see the early stages of a possible near term top in yield. To confirm this top we’ll have to see the 10y yield move lower; ideally down to 2.50% or lower.
This would be a positive for mortgage rates as we move into May; the establishment of a range in the bond market which should bring some stability to mortgage rates.
That being said you should still be very cautious with the direction of mortgage rates. A China trade deal and oil could be major disruptors for bonds and mortgage rates.
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Economic Data This Week:
Today we have the New Home Sales report. On Wednesday we have the weekly Mortgage Market Index report and Thursday is the Durable Goods Report for March. On Friday is the Advanced Q1 GDP and Consumer Inflation Expectations.
New Home Sales Report:
This report is released at 10am EST. If the market has a significant reaction to the report I’ll update the post however normally this report usually has no affect on mortgage rates.
Economic Data Next Week:
On Monday we have the Core PCE report and the Personal Income report for March. On Tuesday we have Employment wages, Consumer Confidence and the Chicago PMI report. Tuesday is also the start of the Fed meeting. On Wednesday we have the ADP Employment report, ISM Manufacturing PMI report and the FOMC rate decision. Thursday we have the ISM-New York Index and Factory Orders report. To finish off the week we have the BLS Employment report and ISM-Non Manufacturing report.
Mortgage Rates Next Week:
Next week will be action packed with so many important economic reports and a Fed meeting. Like the last meeting; no one is expecting the Fed to hike and investors will be focused on what the Fed has to say about the economy and possible future hikes later in 2019/2020.
Mortgage rates will be susceptible to huge swings due to the number of important events next week. Expectations are for 180k new jobs created a 0.3% increase in wages.
Long time readers know that the wage component of the report is especially important to the direction of mortgage rates. Higher than expected wages could push mortgage rates higher; a lower than expected reading could end up being a positive for mortgage rates.
JB Mortgage Capital, Inc.:
We offer industry low mortgage rates for both refinance and purchase transactions, personal one-on-one service and we have an A+ rating with the Better Business Bureau (BBB). We also have a top rating with the Business Consumers Alliance (AAA). We utilize the latest technology to ensure a fast closing and Loan Officer Kevin O’Connor has over 14 years of experience as a mortgage professional.
When it comes to mortgage rates please keep in mind that mortgage rates adjust daily; sometimes they adjust multiple times in a day when the bond market is volatile. Also things like obtaining cash out, lower credit scores, higher Loan-To-Value ratios, rental properties and the subordination of a second mortgage will cause in an increase in your mortgage rate.
To obtain the most up-to-date quote, specific to your loan scenario be sure to contact Loan Officer Kevin O’Connor at 1-800-550-5538 or you can submit a “Contact Us” request on the our website.