Mortgage rates for February 21, 2019 will start the day slightly worse as both Mortgage Backed Securities and Treasuries start the day in negative territory. If the selling intensifies mortgage rates will most likely adjust higher later in the day.
Mortgage Backed Securities and Treasury Snapshot:
Mortgage Backed Security Coupon FNMA 4.0 opened the day at the 102.02 level and the 10y Treasury opened at the 2.68% level. Post morning data the FNMA 4.0 was at 102.03 and the 10y yield was at 2.67% however that changed as investors continued to sell bonds.
FHA Mortgage Rates
Today we have Jobless Claims, Durable Goods (December), Philly Fed and Existing Home Sales. There are no important economic reports on Friday February 22nd, 2019. Next week will be a bit more active with many important economic reports slated to be released. We have Wholesale Inventories and Wholesale Sales on Monday. On Tuesday we have Building Permits, CaseShiller, Housing Starts and Consumer Confidence. Wednesday brings the weekly Mortgage Market Index data, Durable Goods (for January). Thursday is the GDP Prelim Q4 report and Chicago PMI report. We finish off the week with Core PCE, Personal Incomes, Retail Sales (January), and ISM Manufacturing PMI (February).
This morning’s Jobless Claims came in at 216,000 claims (expectations were for 219,000 claims). Fears were mounting that Jobless Claims could be an issue for the economy moving forward however this weeks report should ease those concerns. Overall a positive for the economy.
Today’s report came in at 1.2 and expectations were for a 1.5 reading (this report was for the month of December). The 1.2 reading was better than the previous reading of 0.7 however the report failed to match expectations. Digging deeper into the data you’ll notice the Cap-Ex spending was -0.7 which continues the trend of declining corporate investment. This is a negative for the U.S. economy; healthy economic expansion partly depends on Corporations investing in physical assets (acquiring, maintaining and upgrading) and with out that the economy suffers.
The Philly Fed Index came in way below expectations; -4.1 vs expectations for a 14.0 reading. Last months reading was 17.0. This was a huge surprise and a giant miss for a report that carry’s a lot of weight with investors.
Why these reports matter to mortgage rates:
This morning we had one positive economic report and two negative reports. Jobless claims was the bright spot this morning after weeks of elevated levels. Keep in mind the previous readings were not that bad; just that they were higher than what we’ve become a-custom to and because that it created concern. Is that concern gone now that we had a “lower” reading? Not necessarily; one report doesn’t change things. If it continues for the next 2-4 weeks then yes that concern will most likely go away. As for the Philly Fed and Durable Goods report – a negative for the economy but a positive for mortgage rates. However this morning we’re not seeing that “positive” affect for one main reason: trade negotiations with China.
China Trade Negotiations:
According to CNBC.com the U.S. and China are closer to reaching a trade deal as they work on “six memorandums” that will outline the yet to be agreed upon trade deal. The memorandums are not completed and nothing has been agreed upon so for the most part they’re still a long way away from reaching an agreement.
These memorandums will reportedly focus on:
- Forced technology transfer and cyber theft
- Intellectual property rights
- Non-tariff barriers to trade
So why are bonds selling off and mortgage rates are under pressure?
Despite the dismal Durable Goods and Philly Fed reports investors are looking at the US – China trade negotiations as a greater positive for the economy then the negative economic reports that came out this morning. That may change in the coming days however for now the trade talks are the dominant story driving the market.
Yesterday’s FOMC Minutes Release:
Yesterday’s FOMC Minutes showed the Fed is set on ending their balance sheet reduction plan; possibly later this year which is a positive for bond markets. The Minutes also confirmed that the Fed has concerns about the slowing economy and that future hikes are in jeopardy if the economy does not rebound.
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 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.
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 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 Loan Officer. You can contact him directly at 1-800-550-5538.