Mortgage rates February 6, 2019 will start the day at improved levels after the Mortgage Backed Securities market staged a nice rally yesterday afternoon. Both Mortgage Backed Securities and The 10y Treasury opened the day in positive territory with the 10y yield starting the day at the 2.69% level.
The State of the Union Address:
The State of the Union address was last night and it does not appear the speech will have any affect on the bond market and mortgage rates. If investors were concerned about proposed government spending initiatives that were proposed in the speech (which could lead to increased inflation) then the reaction by mortgage rates would be to move up as the bond market would sell off due to inflation fears.
On the opposite side; if investors were anticipating a stimulus for the economy and wanted the details from the State of the Union speech but those details were weaker or possibly even left out then mortgage rates (and Mortgage Backed Securities) might improve as investors move into bonds (due to fears of a weakening economy). The fact that we’re not seeing any significant moves this morning is a good thing for mortgage rates.
Yesterday’s ISM Non-Manufacturing Report:
The ISM-Non Manufacturing report was weaker than expected and because of that bonds rallied into the afternoon. Expectations were for a 57.2 and the final reading came in at 56.7. Not a huge miss and still a fairly good number however it was just low enough to spark a rally that helped pushed the 10y yield below 2.70%.
Why This Matters To Mortgage Rates:
This matters because mortgage rates improved on an economic report that was almost inline with expectations. The reaction by bonds to this report was a bit stronger than one would anticipate as it pushed the 10y yield back below an important level; 2.72%. Overall it’s good news for mortgage rates.
FHA Mortgage Rates
Today we have we have the weekly mortgage data (Refinance and Purchase applications, more on this below) along with preliminary Productivity and Labor Costs for Q4. There is a 30y Bond Auction on Thursday along with Consumer Credit for December. There are no major economic reports on Friday. Still waiting on the details about when the previously delayed Retail Sales and Durable Goods report will be released.
Today’s Mortgage Market Index:
This mornings report was weaker than anticipated and particularly concerning for the housing industry is the drop in purchase applications despite mortgage rates remaining near recent lows. In fact mortgages rates during the survey period were lower than the previous period. The housing industry has been optimistic that buyers will return to the market as mortgage rates improve and that simply is not happening. This is a weekly survey so it could easily change next week. Mortgage refinance applications showed a small increase.
Why This Matters To Mortgage Rates:
Housing is a big part of the US Economy and if the housing market continues to weaken from recent levels that could be an issue for the economy moving forward. One of our first insights into the health of the Housing market is the weekly survey application data. It’s important not to just take a few weeks of data and make assumptions; you have to look at the trend (if one is forming) over 4-12 weeks. If purchase applications continue to trend down over the next 4-12 weeks that would be problematic for the Housing industry and the economy however it would potentially be a positive for mortgage rates. A big question that needs to be answered is this; are first time home buyers not entering the market?
Next week we have the following reports (no significant reports on Monday or Tuesday):
- Wednesday we have the Core CPI report (important for mortgage rates) and 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.
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 3.625%. 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.