Mortgage rates for February 13th, 2019 will start the day at slightly worse levels to Tuesday after this mornings stronger than expected CPI report (year/year) and news that the President has agreed to the deal made in Congress to fund the government (more on these items below).
Mortgage Backed Securities and Treasury Snapshot:
FNMA 4.0 opened the day at the 102.05 level and the 10y yield started the day at the 2.69% level. If the 10y yield moves higher from these levels ideally we would like to see the yield stay below 2.72%; an important trading level for bonds. Post CPI report the 10y yield moved just above 2.70% and if the selling were to increase it will likely spill over to the Mortgage Backed Securities market and push mortgage rates higher.
FHA Mortgage Rates
Today we had the Core CPI report (an important report for mortgage rates) and the weekly Mortgage Market data. Thursday we have the Core Producer Prices report (somewhat important for mortgage rates) and weekly unemployment claims. Friday we have Import and Export prices and the 1y and 5y inflation outlook. The previously delayed Retail Sales report was just added to Thursday’s releases.
Next week we have the following reports: Markets are closed Monday for Presidents day; on Tuesday we have the NAHB HIM report. On Wednesday we have the weekly Mortgage Market Index and the FOMC Minutes. On Thursday we have weekly Unemployment Claims, Durable Goods, Philly Fed and Existing Home Sales.
Mortgage Market Data:
Despite a slight improvement to mortgage rates; the MBA mortgage application index for both purchases and refinances continue to decline. Last weeks reading was at 378.9 and this week it’s at 364.8. As for the breakdown; Refinance Index came in at 1052.4 (last week 1053.4) and purchases came in at 237.7 (last week 253.1).
Why this matters to mortgage rates:
With mortgage rates near their one year lows you would think both purchase and refinance applications would be increasing, however that is not the case in 2019. If applications continue to decline over the next 4-8 weeks you may see lenders start to get really aggressive with interest rates in comparison to where the bond market will be. What I mean is that overall rates might be higher or lower in 4-8 weeks however the difference between where the bond market is at and mortgage rates might be smaller if lenders need to generate more volume. Lastly; the decline in purchase applications is just another sign that things continue to slow for housing in 2019.
This morning we had the CPI report and expectations were 2.1 (year over year) and 0.1 (month over month). The report came in and on a year/year basis inflation was stronger than expected however on a month/month basis is was weaker than expected: year/year came in at 2.2 and month/month came in at 0.0. Last month’s readings came in at 2.2 and -0.1.
Why this matters to mortgage rates:
Inflation is always a concern for bonds so it’s a concern for mortgage rates. Higher inflation usually means higher rates; lower inflation usually means lower rates (in its most basic form). The CPI report is one of the most important economic reports for the Fed, the bond market and mortgage rates.
Government Shutdown Update:
It appears there may be a deal in place to avoid a second Government Shutdown this week and if so then we no longer need to worry about certain economic reports being delayed (ie Retail Sales, Durable Goods, etc). However if the most recent deal is not approved in the Senate/House and signed by the President before Friday midnight then the government will shutdown again.
Currently We Are Seeing:
30 year fixed mortgage rates below 4.375%, 20 year fixed mortgage rates below 4.25% and 15 year fixed rates below 3.75%. 30 year fixed FHA mortgage rates are below 4.125%. 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 get 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.
JB Mortgage Capital, Inc.:
We offer industry low mortgage rates, personal one-on-one service and we have an A+ rating with the Better Business Bureau (BBB). We also have the 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 Loan Officer. You can contact him directly at 1-800-550-5538.