Heading into the weekend mortgage rates are at their best levels of 2019 as fears over a global economic recession increase. Weeks ago the 10y Treasury yield was above 2.50% and just last fall it was above 3.00%. The move lower has been remarkable and huge boost for consumer mortgage rates.
It’s important to remember these four facts when it comes to mortgage rates:
- The 10y Treasury Note does not set mortgage rates.
- The Fed does not set mortgage rates.
- Mortgage rates originate in the Mortgage Backed Securities market.
- Mortgage lenders set their own mortgage rates based on market conditions and internal factors.
Far too many people believe that the 10y Treasury or the Fed sets mortgage rates. They don’t but they do have an influence over the market where consumer mortgage rates originate. The second factor in setting mortgage rates are internal requirements at the mortgage lender issuing the mortgage rate. And big requirement for mortgage lenders is pipeline control. Meaning how many loan applications are they receiving and how many can they process.
All things being equal; if a mortgage lender is overwhelmed with loan applications they will move their mortgage rates higher in an attempt to slow down the flow of new applications. On the flip side if a mortgage lender is not receiving that many loan applications compared to the rest of the market they might become more aggressive with pricing and move their rates lower.
FHA Mortgage Rates
Jumbo Mortgage Rates
Mortgage Backed Securities and Treasury Snapshot:
Mortgage Backed Security FNMA 3.5 started the day at 101.86 and the FNMA 4.0 coupon started the day at 103.05. The 10y Treasury yield opened the day at 2.16%.
Another rally for the 10y Treasury and another instance in which Mortgage Backed Securities are lagging behind. It’s been a common theme lately as we’ve seen the 10y yield push lower into multi year lows. As we move into June we would anticipate that Mortgage Backed Securities will eventually catch up provide the Treasury market remains at these levels (or improves). If the market holds and Mortgage Backed Securities improve next week we might end up seeing lower mortgage rates heading into the Employment report next Friday.
Economic Data This Week:
Today we have the PCE and the Core PCE report along with the Chicago PMI report and Consumer Inflation Expectations.
PCE and Core PCE:
This mornings PCE report came in at 1.5% and the Core PCE report came in at 1.6%; in lien with expectations.
The Chicago PMI report comes out later this morning. I’ll update the post if the report significantly impacts the Mortgage Backed Securities market. Expectations are for a reading of 53.7.
Economic Data Next Week:
On Monday we have the ISM Manufacturing PMI, Construction Spending and ISM Manufacturing report. On Tuesday we have the ISM-New York Index report. On Wednesday we have the weekly Mortgage Market Index, ADP Employment report and ISM non-manufacturing PMI for May. ON Friday we have the monthly BLS jobs report along with Wholesale Inventories.
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 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.