December 2019 Mortgage Rates:
As we move into last month of December mortgage rates remain low and processing times remain fast. Conventional, FHA and Jumbo mortgage rates for both purchase and refinance transactions remain the most attractive loan programs.
Mortgage Rates - Conforming Loans
Mortgage Rates - FHA Loans
Mortgage Rates - Jumbo Loans
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Opportunities and Risks in December:
As mentioned; mortgage rates are low right now and the big question for December is:
- Will mortgage rates remain stable, move lower or mover higher?
Answering that question is difficult at best. The biggest opportunity for mortgage rates to move lower might be the first week or two in December. The two weeks of December will be important for mortgage rates in that we have many important economic reports being issued and there is a Fed meeting (second week). ISM, Employment, CPI and Retail Sales are some of the most important reports being issued during the first two weeks of December.
How could this benefit mortgage rates?
Simply put; weaker reports could lead to lower mortgage rates. When economic reports come in below expectations investors in bonds (specifically Mortgage Backed Securities) become more concerned about the economy and that leads to more bond purchases. And when bonds rally mortgage rates improve.
Risks for mortgage rates in December:
Three big ones stand out as significant risks to mortgage rates:
- Better than expected economic data
The big two are China and economic data that comes in better. These two can have the biggest impact on bond markets and mortgage rates. For nearly two months we’ve been hearing a trade deal with China is about to be completed (phase one) and so far nothing. Brexit news could heat up again as the UK votes later this month. As for economic data; better than expected economic data might push mortgage rates higher in December.
Mortgage Backed Securities & Treasury Snapshot:
December 2nd, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.31 and the FNMA 3.5 coupon started the day at 102.61. The 10y Treasury yield started the day at the 1.77% level.
December 3rd, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.31 and the FNMA 3.5 coupon started the day at 102.63. The 10y Treasury yield started the day at the 1.78% level.
After the open bonds rallied on comments made by President Trump. He said he might wait until after the November 2020 election to agree on a trade deal and also some news organizations were reporting that the December 15th tariffs will happen (according to the White House). By 10:45 (EST) the 10y yield moved below 1.72% and the FNMA 3.0 was at 101.67 and the FNMA 3.5 was at 102.80.
December 4th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.45 and the FNMA 3.5 coupon started the day at 102.67. The 10y Treasury yield started the day at the 1.74% level.
The market was selling off just after open despite weaker ADP and ISM reports (see below for further details). Why? Overnight and this morning there were positive trade deal comments that a deal was near.
December 5th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.28 and the FNMA 3.5 coupon started the day at 102.61. The 10y Treasury yield started the day at the 1.78% level.
December 6th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.38 and the FNMA 3.5 coupon started the day at 102.70. The 10y Treasury yield started the day at the 1.79% level.
Ignore the open though; bond markets sold off significantly just after the employment report release – more on this below. Post release the 10y yield hit 1.86%.
Economic Calendar For December:
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 on the Mortgage Backed Securities market and consumer mortgage rates.
Monday – December 2nd:
- ISM Manufacturing PMI-November: The reading came in lower than expected (48.1 vs 49.2). Last months reading came in at 48.3. Overall this is another weak report and the ISM report is an important one to keep an eye. Post report Treasuries and Mortgage Backed Securities both rallied on the weaker than expected data.
- Construction Spending: The reading came in weaker than expected; -0.8% vs 0.4%. Last months reading was revised lower to -0.3%
Tuesday – December 3rd:
- ISM-New York Index for November: Expectations are for a reading of 874.3 and that is what was reported.
Wednesday – December 4th:
- Mortgage Market Index: The overall index came in at 512.4 after last months reading of 564.1. The biggest reason was that refinance applications tanked; 22282.2 last week vs 1925.7 this week.
- ADP National Employment: The market was expecting a reading of 140,000 non-government jobs created after last months reading of 125,000. However the reading came in way below expectations at only 67,000 jobs created.
- ISM Non-Manufacturing PMI-November: Another important report disappoints. The market was expecting a reading of 54.5 however the reading came in at 53.9.
With two misses the market still sold off (normally it would rally) which shows how important the trade negotiations are to the market. It’s important to keep this in mind when making mortgage rate lock decisions.
Thursday – December 5th:
- Weekly Jobless Claims: This weeks report came in at 203,000 claims after last weeks report of 215,000 claims.
- Factory Orders – October: Market expectations are for a o.3% increase after last months -0.6% decline and that’s exactly what the report showed.
Friday – December 6th:
- Employment Report: The market was expecting 180,000 jobs, a wage increase of 0.3% and an unemployment rate of 3.6%. The report was significantly better than that as far as number of jobs created: 266,000 jobs. Unemployment rate also came in better than expected; 3.50% and wages came in below expectations at 0.2%.
- 5y and 1y Inflation Outlook: The report showed 5y Inflation Outlook at 2.5% and the 1y Inflation Outlook at 2.5%.
- Consumer Sentiment: Last months reading came in at 97.0.
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