February 2020 mortgage rates in California are at multi-year lows to start the month and that trend is continuing as we head into the last week of February. The jobs report was stronger this month, the monthly report showed 206,000 jobs created, 0.2 increase in wages, and an unemployment rate of 3.6%.
Compared to last month’s report of 139,000 jobs created.
Below are our Conventional, FHA, and Jumbo fixed mortgage rates at various term lengths. If you would like a quote specific to your transaction please be sure to contact me directly (you can use the contact form below or call me at 1-800-550-5538). We offer low rates, fast closings, and one on one personal service.
Opportunities And Risks For February 2020 Mortgage Rates
With mortgage rates near their multi-year lows, there is only a small chance we’ll see mortgage rates move significantly lower in the coming weeks. Both 30-year fixed-rate mortgages and 15-year fixed-rate mortgages are very attractive and mortgage lenders in California are being very aggressive with their interest rate levels.
If you have the opportunity to lock in at these current levels you should not hesitate to do so.
Mortgage Rate Changes And The Coronavirus:
Whenever mortgage rates decline the way they have in the last four to six weeks the risk for a reversal increases dramatically. From the end of January through the beginning of February, the market was reacting to the Coronavirus that was spreading around the world.
Unless this is the doomsday virus that ends up killing millions of people the current market environment will not continue (all things being equal).
In fact, once the market believes the spread of the virus is under control you’ll probably see a significant sell-off in bonds and mortgage rates will move higher. And sometimes that snap back pushes mortgage rates higher than the level they were at prior to the event.
And to put things in perspective; the Coronavirus has killed 362 people as of February 2nd (globally). That is nowhere near the number of Flu deaths just in the United States. According to ABC, the CDC claims 10,000 American’s have died during the 2019-2020 flu season which does not end for several more months.
As you can see the Flu is having a much bigger impact. Therefore it is likely that the markets will eventually realize that the fears associated with the Coronavirus are overblown (for now) and once that happens you’ll probably see a sharp selloff in bonds and higher mortgage rates (all things being equal).
February 2020 Mortgage Rate Average
We’ll update this section as we move further into February however, for now, the average 30-year fixed-rate in California is below 3.50% and the average 15-year fixed-rate in California is below 3.125%.
California Mortgage Calculator
Using a mortgage calculator to figure out your monthly mortgage payment is an essential part of buying a home in California or refinancing a current mortgage. Use our free mortgage calculator to help you determine what you can afford and if you have questions please don’t hesitate to ask!
February 2020 Mortgage Rate Forecasts For California
February 2020 mortgage rate forecasts in California are as follows:
- 30 year fixed rates below 3.625%
- 20 year fixed rates below 3.50%
- 15 year fixed rates below 3.25%
This is based on a loan amount of $300,000, a primary home, excellent credit, and a Loan-To-Value ratio below 75%.
The Fed’s Impact On Mortgage Rates In February 2020
On January 28th and January 29th the Fed held a two-day meeting. Heading into the meeting market investors and analysts were predicting that the Fed would keep current interest rates levels in place and that is exactly what they did. There were no huge surprises and the Fed was and continues to be clear that they are in a “wait and see” mode to see how the economy responds to the several cuts that took place back in 2019.
Conventional Mortgage Rates:
Conventional mortgage rates in California are used for both purchase loans and refinance transactions. With Conventional mortgage rates in California near multi-year lows, many potential homebuyers are stepping into the market to buy that first home.
Products include options for minimal down payment and options for those looking to take cash out of their current property. Provided you have a 20% down payment (or 20% equity) you will avoid Mortgage Insurance with a Conventional loan. Another name that is used with Conventional loans is Conforming loans.
Back in February 2019 Conventional 30 year fixed mortgage rates were above 4.25%.
FHA Mortgage Rates:
If you have a below 700 credit score and/or a small down payment (or little equity) you should consider the FHA home loan program. The good news about the FHA home loan program in California is that FHA mortgage rates are typically lower than Conventional mortgage rates (30 year fixed rate program).
FHA mortgage rates do come with Mortgage Insurance (MI) so you’ll need to factor that into your monthly payment calculation.
Back in February 2019 FHA 30 year fixed mortgage rates were above 3.75%.
Mortgage Rate FAQ’s
Here we answer some popular questions about mortgage rates in California.
How Low Will Mortgage Rates Go In 2020?
Mortgage rates in California for 2020 will be dictated by the direction of the Mortgage-Backed Securities market and mortgage lender loan volume needs.
30 year fixed rate at 3.125% would be decades low in the market and probably would not last long.
There is a chance that mortgage rates in 2020 will push lower however there are significant risks to mortgage rates moving higher. If you can lock in a low mortgage rate now you should not hesitate to do so.
Is 3.75% A Good Mortgage Rate?
In the current market environment, a 3.75% mortgage rate on a 30 year fixed loan is good for those with less than perfect credit. It’s also good for cash-out refinances, non-owner occupied properties, and multi-unit properties. If you have excellent credit, equity (greater than 25%) and you are not taking cash out, you probably will be able to obtain a mortgage rate that is lower than that.
What Are Today’s Mortgage Rates In California?
For the latest update on today’s mortgage rates in California please see our updated mortgage rate tables located at the top of this page.
Which Mortgage Lender In California Has The Best Rates?
A mortgage lender in California that has the best rates and services can usually be found on the Better Business Bureau website. You’ll want to look for a mortgage lender that has at least an “A” rating and check to see what their rating is on Zillow.
If the mortgage lender has an “A” rating with the Better Business Bureau and a Five Star rating with Zillow then you’ll be working with of the best mortgage lenders in California.
Why Are Mortgage Rates Not Lower?
On February 22nd, 2020 the 10y yield hit 1.35% but mortgage rates were generally at the same levels from the previous week when the 10y yield was above 1.50%.
Great question with a simple answer; actually two simple answers. Mortgage rates do not originate in the Treasury market; they originate in the Mortgage-Backed Securities market (MBS). The rally in MBS has not been as significant as the rally in the treasury market.
The second reason why mortgage rates are not lower is that there is little to no interest (pun intended) among mortgage lenders to lower rates even further. They have all the business they can handle right now and also they don’t want everyone who just did a loan in the last six months to refinance.
Lastly; here’s a little-known fact among consumers – mortgage lenders tend to lose money if you refinance (or simply pay off your loan) quickly.
Economic Calendar For February 2020
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 the Mortgage-Backed Securities market and consumer mortgage rates.
The first week of February is a big week for economic reports that might impact mortgage rates. To start the week off we have the ISM Manufacturing report followed by the ADP Employment, the ISM Non-Manufacturing PMI, Wholesale Inventories, Wholesale Sales, Consumer Credit, and the BLS Employment reports.
The Mortgage-Backed Securities market will be focused on these reports and what they say about the economy. A stronger than expected report might push mortgage rates higher, and a weaker than expected report will help keep current mortgage rates somewhat stable.
It’s unlikely that any of these reports will push mortgage rates lower since current mortgage rates are near their must-year lows.
Wednesday – February 26th:
- Mortgage Market Index: The mortgage market index increased from 645.5 to 655.0. The purchase component increased from 258.4 to 273.1 and the refinance component decreased from 2875.1 to 2852.9.
- New Home Sales: The report smashed expectations of a 3.5% increase (came in at a 7.9% increase).
Tuesday – February 25th:
- Consumer Confidence: Last month it came in at 131.6 and today’s report came in at 130.7
Friday – February 21st:
- PMI-Manufacturing (Markit) For February: Last month the reading came in at 51.9 and this month it came in at 50.8 (below the 51.5 the market was anticipating).
- PMI-Composite (Markit): It came in below 50 (at 49.6) after last month’s number of 53.3. A reading below 50 shows the economy is contracting.
- PMI-Service (Markit): Another report that came in below expectations. The market was expecting a reading of 53.0 (last month it was 53.4) however it came in at 49.4.
Post Markit reports the bond market rallied and the 10y yield dropped to the 1.45% level before moving higher to 1.47%. The market was already in rally mode prior to the report as concerns over the spreading Coronavirus continue. What many of you might be noticing is that mortgage rates are not improving that much even though the 10y yield broke below 1.50%.
That’s because the Mortgage-Backed Securities market is not rallying as much and lenders are being cautious with interest rates. They are already at multi-year lows and they have very little incentive to lower them even more.
Thursday – February 20th:
- Philly Fed Index: A huge beat with the Philly Fed Index, however, there was no impact to MBS and consumer mortgage rates (36.7 vs 12.0)
- Weekly Unemployment Claims: Unemployment claims came in at 210,000
Wednesday – February 19th:
- Mortgage Market Index: Somewhat surprising to see, mortgage applications for both Purchase and Refinance transactions declined in the latest MMI survey. The overall Index came in at 645.5 (last week it was 689.5). The Refinance component dropped from 3123.6 to 2875.1 and the Purchase component dropped from 267.4 to 258.4. This is actually good news for both borrowers and mortgage lenders. A slow down in applications will allow mortgage lenders to catch up which is good for overall review times.
- Core Producer Prices: This report came in much higher than expected; 1.7% increase vs expectations of 1.3%.
- Housing Starts: The annual rate for Housing Starts came in at 1,567,000 units after last month’s 1,608,000 report.
- Building Permits: Building permits jumped from 1,450,000 (annual rate) to 1,551,000.
Monday – February 17th:
- Markets were closed for President’s Day.
Friday – February 14th:
- Retail Sales: Retail sales came in as expected (0.3% vs 0.3%) however last month’s number was revised down to 0.2% (originally reported at an increase of 0.3%).
- Import and Export Prices: Both Import and Export Prices came in better than expected. Import Prices came in at 0.0% and Export Prices came in at 0.7% – for both reports the market was expecting a decline.
- Consumer Sentiment: This report also beat expectations and came in at 100.9
- 1y and 5y Inflation Outlook: The 1y Inflation Outlook was in line with expectations however the 5y came in under expectations at 2.3%
Thursday – February 13th:
- Core CPI: The market was expecting a reading of a 2.2% increase after last month however today’s reading came in at 2.3%. Not a huge beat but something to keep an eye on. The market had no reaction to the better-than-expected report.
Wednesday – February 12th:
- Mortgage Market Index: Last week it came in at 682.0 and this week the report came in at 689.5 fueled by strong demand in refinance applications. In fact, the Purchase index declined from 283.8 to 267.4 while the Refinance index increase from 2975.7 to 3123.6.
Friday – February 7th:
- BLS Employment Report: Last month the BLS Employment report showed 139,000 jobs created, an average wage increase of 0.1, and an unemployment rate of 3.5%. The numbers from this morning are as follows: 206,000 jobs created, 0.2 increase in wages, and an unemployment rate of 3.6%.
Wednesday – February 5th:
- MBA Mortgage Index: Last week the number was at 649.8 and this week’s report increased to 682.0. The refinance component moved from 2581.2 to 2975.7 and the purchase component moved from 313.7 down to 283.8.
- ADP National Employment: Last month the ADP employment number came in at 202,000 jobs created and the expectations for this month were 156,000 jobs created. However, the report blew past that and came in at 291,000. This caused bonds to sell off and will have an impact on February 2020 mortgage rates if the BLS Employment report comes in strong as well (on Friday).
- ISM Non-Manufacturing PMI: Last month the number came in at 55.0 and that’s what today’s report showed as well.
Tuesday – February 4th:
- ISM- New York Index For January (pending): Last month’s reading came in at 869.0. The reading came in at 866.9 and there was no impact on February 2020 mortgage rates.
- Factory Orders for December (pending): The previous report showed a decline of -0.7%. Factory orders increased by 1.8% and like the ISM report, there was no impact on February 2020 mortgage rates.
Monday – February 3rd:
- ISM Manufacturing PMI: The market was expecting a reading of 48.5 after last months reading of 47.8. The actual reading came in at 50.9 which shows expansion (below 50 shows contraction). Post report bonds sold off since it came in stronger than expected.
- Construction Spending: Last month Construction spending expanded and the monthly number showed a 0.6% increase. The most recent report showed a decline of -0.2%. This report had little to no impact on bond markets and no impact on February 2020 mortgage rates.
Staying on top of the current economic reports is essential to understanding market direction. It’s the biggest impact on consumer mortgage rates is.
January’s Job Report And Mortgage Rates
Sometimes the market throws you a curveball, and that’s what happened with the January job’s report and mortgage rates (remember that the January numbers were reported in February).
The report gave provided some good numbers and in most cases, the bond market would have probably sold off. It would not be surprising to see mortgage rates worsen with numbers like this however that’s not what happened.
Post report the 10y yield rallied from 1.64% to 1.58% and the FNMA 3.0 coupon rallied 20 basis points. That is surprising and it’s not clear as to why this happened.
Before mortgage lenders pass along improvements they’ll want to see this as a “sustainable” move so you probably won’t see much in the way of improvements for one to three days. Even though the improvements will be minor since mortgage rates are at multi-year lows.
Fed’s Powell Testimony To Congress And Mortgage Rates
On Tuesday, February 11th, 2020 Fed Chairman testified in front of Congress. Powell’s testimony does not usually have a huge impact on mortgage rates but it sometimes can. Today is one of those days in which his testimony had little impact on mortgage rates but nonetheless, there were some interesting bits of information.
- The Fed is actually monitoring the Coronavirus. They are concerned the disruption in China will drastically impact the Chinese economy which in turn could have a negative impact on the world economy.
- Powell expects inflation to move closer to 2% over the next few months. I think this has been repeated over and over again during the last few years and it never happens.
- Powell would like to see a boost in labor force participation and productivity.
- Powell says they will transition away from active Repos. Since September of 2019, the Fed has been injecting hundreds of billions of dollars into the banking system in the overnight lending market (called Repos).
As you can see nothing earth-shattering which is why the market has had little to no reaction.
Mortgage-Backed Securities & Treasury Snapshot
February 24th – February 28th:
Coronavirus continues to push Treasury yields lower and MBS reluctantly is following. Mortgage-Backed Security FNMA 3.0 started the week around the 102.33 level and the FNMA 3.5 coupon started at the 103.38 level. The 10y Treasury yield was at the 1.38% level to start the week.
At the end of the week, Mortgage-Backed Security FNMA 3.0 was at the 102.91 level and the FNMA 3.5 coupon was at the 103.77 level. The 10y Treasury yield was at 1.16%.
February 17th – February 21st:
Mortgage-Backed Security FNMA 3.0 started the week around the 102.02 level and the FNMA 3.5 coupon started at the 103.20 level. The 10y Treasury yield was at the 1.58% level to start the week.
At the end of the week, Mortgage-Backed Security FNMA 3.0 was at the 102.22 level and the FNMA 3.5 coupon was at the 103.33 level. The 10y Treasury yield was at 1.47%.
February 10th – February 14th:
Mortgage-Backed Security FNMA 3.0 started the week around the 102.23 level and the FNMA 3.5 coupon started at the 103.20 level. The 10y Treasury yield was at the 1.58% level to start the week.
At the end of the week, Mortgage-Backed Security FNMA 3.0 was at the 102.02 level and the FNMA 3.5 coupon was at the 103.22 level. The 10y Treasury yield was at 1.58%.
February 3rd – February 7th:
Mortgage-Backed Security FNMA 3.0 started the week around the 102.17 level and the FNMA 3.5 coupon started at the 103.23 level. The 10y Treasury yield was at the 1.55% level to start the week.
At the end of the week, Mortgage-Backed Security FNMA 3.0 was at the 102.27 level and the FNMA 3.5 coupon was at the 103.17 level. The 10y Treasury yield was at 1.56%.