Today’s Mortgage Rates:
Most Conforming, FHA and Jumbo fixed mortgage rates for both refinance and purchase transactions are at multi-years lows as we move further into August. Refinance loan application volume continues to increase as homeowners look to lower their current interest rate, take cash out or get rid of Private Mortgage Insurance (PMI) or FHA Mortgage Insurance (MI).
Keep an eye on the Core CPI report later this week.
When it comes to mortgage rates there are some economic reports that have a bigger impact than others and one of the most important economic reports is the Core CPI report (more on the report below). The report is considered one of the best measurements of inflation in the US economy.
Mortgage Rates - Conforming Loans
Mortgage Rates - FHA Loans
Mortgage Rates - Jumbo Loans
Mortgage Backed Securities & Treasury Snapshot:
August 12th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.67, FNMA 3.5 started the day at 102.66 and the FNMA 4.0 coupon started the day at 103.61. The 10y Treasury yield started the day at the 1.69% level.
August 13th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.52, FNMA 3.5 started the day at 102.55 and the FNMA 4.0 coupon started the day at 103.52. The 10y Treasury yield started the day at the 1.64% level.
Mortgage Backed Securities and Treasuries are moving in opposite directions. It’s a rate occurrence however it can happen when treasury yields move down too fast.
August 14th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.58, FNMA 3.5 started the day at 102.53 and the FNMA 4.0 coupon started the day at 103.47. The 10y Treasury yield started the day at the 1.58% level.
Yesterday the 10y yield reversed course and moved back above 1.70% before the end of the day. Mortgage Backed Securities also went negative and before the end of the day many lenders reissued rates (for the worse). Opening up below 1.60% this morning is a huge move to start the day.
Adding to this is the fact the 2y and 10y Treasury have inverted (the 2y yield is higher than the 10y yield) and over the last 40+ years a 2y/10y inversion preceded every recession. One very important point to remember; in some cases a recession followed 2-years after the inversion. Inversions don’t cause recessions and it doesn’t mean a recession is right around the corner.
August 15th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.61, FNMA 3.5 started the day at 102.58 and the FNMA 4.0 coupon started the day at 103.52. The 10y Treasury yield started the day at the 1.54% level and the 2y Treasury opened the day at the 1.53%. I’m including the 2y Treasury since it’s so close to the 10y yield.
The Treasury rally continues however Mortgage Backed Securities continue to lag. That probably will continue until the rally ends and yields level off. Even then there is no guarantee Mortgage Backed Securities will catch up to Treasury yields.
August 16th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.83, FNMA 3.5 started the day at 102.72 and the FNMA 4.0 coupon started the day at 103.66. The 10y Treasury yield started the day at the 1.54% level and the 2y Treasury opened the day at the 1.50%.
Post data released bonds sold off and yields moved higher. It wasn’t because of it (this mornings data usually doesn’t move markets) and it appears it was just a reversal of momentum for traders.
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Important Economic Data This Week:
Here we cover the daily economic events that might impact mortgage rates. After the report comes out we’ll update the post with that information and comment on if there is a potential impact on mortgage rates.
There are no important economic reports scheduled for Monday. On Tuesday we have the Core CPI and on Wednesday we have the Import and Export Price reports along with the weekly Mortgage Market Index.
On Thursday we have the Retail Sales report along with the Philly Fed Business Index report, NAHB Housing Index and Jobless Claims. To finish off the week we have Housing Starts, Building Permits, and the 5yr and 1yr Inflation Outlook.
Expectations are for a reading of 2.1% (annual) and a 0.3% (monthly). Last months reading came in at 2.1% and 0.1%. The Core CPI report can have a major impact on bond markets and mortgage rates. It’s one of the most important measurements of inflation and a report showing inflation is moving higher could easily push mortgage rates back up to higher levels.
This morning’s reading came in at 2.3% (year over year) and 0.3% (month over month). Post report the 10y yield moved 1.66% and Mortgage Backed Securities also sold off a bit due to the slight increase in the monthly inflation report.
Import and Export Prices:
Import Prices are expected to come in at 0.0% (last months reading was -0.9%). Export Prices are expected to come in at a 0.0% reading as well (last months reading came in at -0.7%).
Import Prices came in at a 0.2% increase and Export Prices came in at a 0.2% increase. Both higher than expected and higher than the previous months reading. There was no notable reaction in the bond market post release.
Mortgage Market Index:
Last weeks reading of the Mortgage Bankers Association (MBA) Mortgage Market Index came in at 509.8; and increase from the previous week. The Refinance Index jumped to 2003.00 and the Purchase Index came in at 247.9. It will be interesting to see if the Purchase Index can increase with multi-year lows. Low home loan rates in California have helped fuel a “mini refinance boom” as homeowners look to lower their current mortgage rate.
The Mortgage Market Index came in at 620.4; a huge jump from last weeks reading of 509.8. The MBA Purchase component came in at 252.6 and the Refinance component came in at 2742.9. This is one of the biggest jumps we’ve seen in years.
Expectations are for a reading of 0.3% after last months 0.4% increase. The reading came in at a 0.7% increase and post repot bonds sold off.
Philly Fed Business Index:
The market is expecting the Philly Fed index to decline from 21.8 (last months reading) to 10.00. The reading came in at 16.8; much stronger than anticipated.
NAHB Housing Index:
The industry is expecting a reading of 65 which is the same as the previous reading.
Weekly Jobless Claims:
Expectations for weekly Jobless Claims are at 212,000.
Housing Starts are expected to come in at 1,259,000 units (annual rate) after last months reading of 1,253,000 (annual rate). The report came in at 1,119,100 units (annual rate) which is significantly below expectations
Building Permits are expected to come in at 1,270,000 permits (annual rate) after last months reading of 1,232,000 permits (annual rate). The report came in at 1,336,000 units (annual rate).
1y and 5y Inflation Outlook:
The market is expecting the 1y Inflation Outlook to come in at 2.6% and the 5y Inflation Outlook to come in at 2.6%.
The 1yr Inflation Outlook report came in at 2.7% and the 5y Inflation Outlook report came in at 2.6%.
Money Saving Mortgage Tips:
Are you looking to refinance your current mortgage or perhaps you’re considering the purchase of a new home? Here are some money saving mortgage tips you can use to help save you thousands of dollars on your next mortgage transaction!
- Work with well a respected/highly rated mortgage company. Use tools like the Better Business Bureau to help find quality mortgage companies to get quotes from. If you are using the BBB; make sure the company has at least an “A”rating and is Accredited by the BBB.
- Chose a Loan Officer that has at least 5+ years of experience (preferably 10+ years).
- Openly discuss with your Loan Officer your goals and ask lots of questions.
Doing these three things could end up saving you thousands of dollars on your next mortgage transaction. There are hundred (possibly thousands!) of mortgage companies that advertise unrealistic mortgage rates just to get you in the door. Then at closing comes the big surprise; a higher rate and/or higher fees. That’s where the reputation of the mortgage company and the Loan Officer experience comes in.
A tool you can use to verify where current mortgage rates are at is the Mortgage Bankers Association weekly Mortgage Market Index report. Heading into this week the average 30 year fixed rate (with fees) is 4.00%.
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.
Loan Officer Kevin O’Connor:
Kevin grew up in California and works with clients throughout the state. From the initial quote to the application to the final closing; Kevin works directly with each and every homeowner and encourages his clients to ask questions so that they’re better informed. He updates koloans.com on daily basis and you can connect with him on social media: Twitter Rates01