Mortgage Rates Third Week – October 2019:
At the end of last week mortgage rates moved higher on news the US and China have agreed to a new trade deal; specifically referred to Phase 1. As our readers know all year long we’ve mentioned that a trade deal with China could be the catalyst to push mortgage rates significantly higher. The good news for mortgage rates is that we are still well below levels seen this time last year.
Some additional good news for mortgage rates: China claims there is no official deal and there is still a lot of work to be done. Additional reports have said at best they have a general framework in which a limited deal could be reached before the end of the year.
As we move forward will have to keep an eye on additional developments as they become available.
Mortgage Rates - Conforming Loans
Mortgage Rates - FHA Loans
Mortgage Rates - Jumbo Loans
Mortgage Backed Securities & Treasury Snapshot:
October 14, 2019:
Bond markets were closed today. We’ll have to see what happens tomorrow but it appears there is a good chance the bond market will attempt to make a comeback with news that the “trade deal” really is isn’t a done deal. It’s definitely not certain and it’s important to take a cautious approach to mortgage rates this week.
Here were the opening prices from last Friday:
Mortgage Backed Security FNMA 3.0 started the day at 101.22, and the FNMA 3.5 coupon started the day at 102.38. The 10y Treasury yield started the day at the 1.71% level.
October 15, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.34, and the FNMA 3.5 coupon started the day at 102.50. The 10y Treasury yield started the day at the 1.68% level.
It appears bond markets are positive today after reports the “trade deal” announced by Trump last week was not really a trade deal in that nothing is in writing and the China has stated that there is a long way to go before an agreement could be made. Even though bond markets are improving this morning; mortgage rates may have a delayed reaction (which is typical). If these levels hold or improve later in the week then mortgage rates should improve.
October 16, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.19, and the FNMA 3.5 coupon started the day at 102.41. The 10y Treasury yield started the day at the 1.74% level.
Despite the weaker economic data, Brexit issues and China claiming there really isn’t a trade deal in place – the bond market struggled to improve.
October 17, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.09, and the FNMA 3.5 coupon started the day at 102.34. The 10y Treasury yield started the day at the 1.73% level.
Post open the 10y yield moved higher (1.77% level) on news a deal has been reached between the UK and EU (Brexit) however doubts remain if it can pass.
October 18, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.00, and the FNMA 3.5 coupon started the day at 102.33. The 10y Treasury yield started the day at the 1.76% level.
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Important Economic Data This Week:
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 on the Mortgage Backed Securities market and consumer mortgage rates.
On Tuesday we have the NY Fed Manufacturing report for October. On Wednesday we have the weekly Mortgage Market Index, the NAHB Housing Market report and the September Retail Sales report. On Thursday we have the Building Permits, Housing Starts and the Philly Fed Business Index for October.
NY Fed Manufacturing:
Market expectations for the New York Fed Manufacturing report were for a 1.00% increase after last months 2.00% increase. The reading came in at a 4.00% increase.
Mortgage Market Index:
Applications for a mortgage increased in the latest weekly survey. The Refinance component increased from 2418.1 last week to 2505.8 this week. The Purchase component decreased from 252.2 to 250.6. The overall index increased from 574.5 to 585.5.
A big miss with the retail sales report. The market was expecting a reading of 0.3% increase however the report showed a -0.3% decrease in Retail Sales after last months reading of 0.4%.
Building Permits and Housing Starts:
Building permits declined 2.7% after increasing 8.2% last month. Housing starts declined 9.4% last month after increasing 12.3% the previous month.
Weekly Jobless Claims:
Jobless claims remained steady at 214,000 claims compared to last months 215,000 claims.
Industrial production declined in the most recent report; -0.4% compared to last months reading of -0.1%.
Philly Fed Business Index:
The most important economic report on Thursday came in below expectations. The market was expecting a reading of 8.0 and it came in at 5.6 after last months reading of 12.0.
Super Fast Mortgage Loan Processing:
12-13 years ago many lender offered a “no-doc” mortgage loan program. What did that exactly mean? Back then you did not have to provide nor prove your income and/or assets. You basically completed your loan application with your personal information and that was it!
Sounds great but it ultimately was one of the main causes for the financial meltdown of 2008.
It’s 2019 and guess what….a form of the “no-doc” program is back. However this “no-doc” program is vastly different then the previous one. The modern day “no-doc” mortgage loan is where the lender independently verifies your income and assets so you don’t have to provide the documentation.
So unlike the original version from pre-2008 this version you do have to prove you have a source of income and how much that income is. Not everyone qualifies and not everyone can opt for the modern day “no-doc” program but it is available to some homebuyers and homeowners.
Some additional good news; the ultra-fast program does not cost the borrower more. Contact us today to find out if you qualify for the modern day “no-doc” loan program.
Brexit and Mortgage Rates:
You may have seen in the headlines that a deal was reached between the UK and the EU and a vote was to take place (in the UK) this weekend for an orderly exit from the EU (commonly referred to as “Brexit”).
Mortgage rates have moved higher this week as a result of the news and many homeowners and homebuyers are asking: What does Brexit have to do with US mortgage rates?!?
US mortgage rates originate from the Mortgage Backed Securities market. The MBS market are made up of bonds which are influenced by the US Treasury bond market and others such as European bond markets.
Bond investors view a Brexit deal as a positive for European economies but also the US economy as well. Positive economic news usually results in government bond market selling and then that generally spills over to Mortgage Backed Securities selling off and thus mortgage rates move higher.
Are there times when bonds sell-off and mortgage rates stay the same?
Sometimes that does happen especially if the sell-off in bonds is minimal and/or mortgage rates were slow to improve after an improving bond market.
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.
Loan Officer Kevin O’Connor:
Kevin grew up in California and works with clients throughout the state. From the initial quote to the application to the final closing; Kevin works directly with each and every homeowner and encourages his clients to ask questions so that they’re better informed. He updates koloans.com on daily basis and you can connect with him on social media: Twitter Rates01