Mortgage rates for June 18, 2019 are improved after overnight comments from Mario Draghi (European Central Bank President). Details of what he said are below.
His comments are pushing bond yields and mortgage rates lower a day before the Fed announcement.
FHA Mortgage Rates
Jumbo Mortgage Rates
Mortgage Backed Securities and Treasury Snapshot:
Mortgage Backed Security FNMA 3.5 started the day at 102.05 and the FNMA 4.0 coupon started the day at 103.22. The 10y Treasury yield opened the day at 2.01%. Shortly after the open the 10y yield moved higher to 2.03%.
Mario Draghi, Bond Yields and Mortgage Rates:
As mentioned; overnight comments from ECB President Mario Draghi are helping push bond yields lower as well as mortgage rates. European bond (German and UK) yields are falling more dramatically as the economic conditions continue to worsen in Europe. Here is a brief overview of Draghi’s statements:
- Negative rates have proven to be a very important took in the Euro area
- In the absence of improvement….additional stimulus will be required
- Broad discretion of the ECB in using all our tools
- All these options were raised and discussed at out last meeting
Clearly the ECB is concerned about the current slowdown in Europe and Draghi’s comments reveal that they are willing to send rates lower (European) to try and avoid a prolonged downturn.
President Trump tweeted that he and Xi Jingping had a phone conversation and they’ll be meeting at the G20 summit next week. This is good news for the economy and bad news for bonds. The 10y treasury yield reversed course and is currently at 2.70%. Mortgage Backed Securities are barely positive on the day so we may see a mortgage rate adjustment later in the afternoon.
Economic Data This Week:
Today we have the Housing Starts, and Building Permits reports along with the start of the June FOMC (Fed) meeting. On Wednesday we have the weekly Mortgage Market Index and the FOMC decision. On Thursday we have the Philly Fed Business Index and the weekly Unemployment numbers. On Friday we have Existing Home Sales for May.
Expectations were for an annual reading of 1.239 and the reading came in above expectations at an annual rate of 1.269 million. This is below last months revised reading of 1.281 million (annual rate).
Expectations were an annual rate of 1.294 million permits and the reading came in at 1.294 million which is above last months reading of 1.290 million.
Tomorrow’s Fed Decision:
With tomorrow’s Fed decision many people are asking; will the Fed lower? While some news reporters and organizations are proclaiming this will happen it’s highly unlikely the Fed will lower. The more likely scenario is the language of their statement will most likely indicate that if things don’t improve from current levels they will then step in and make adjustments to current policy (lower rates).
The real question (for the housing and mortgage industry) is how will tomorrow’s decision impact mortgage rates? Keep in mind this important fact; if the Fed lowers it does not mean mortgage rates will move lower. In fact they could easily move higher.
The Fed does not control mortgage rates but their actions can influence the direction of mortgage rates. If the Fed lowers down the road investors will view that as a positive for the economy and positive news for the economy is generally bad news for mortgage rates.
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 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 our website.