Mid-September Mortgage Rates:
Conforming, FHA and Jumbo fixed mortgage rates may see some improvement this week as the market adjusts to the risks associated with potential war in the middle-east. Over the weekend an oil refinery in Saudi Arabia was attached and today we’re seeing bond markets rally on that news. However these gains might be short lived if there is a quick resolution to the conflict (more on this below).
This week is the Fed meeting and the release their decision at 12:00pm (PST). Many believe the Fed will lower but recently some have reversed that assumption due to the stronger than expected economic data that has come out. The Fed does not directly control mortgage rates however their policy stance and views on the economy do have an influence over the direction of Mortgage Backed Securities and more specifically consumer mortgage rates.
Mortgage Rates - Conforming Loans
Mortgage Rates - FHA Loans
Mortgage Rates - Jumbo Loans
Mortgage Backed Securities & Treasury Snapshot:
September 16th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 100.88, and the FNMA 3.5 coupon started the day at 102.25. The 10y Treasury yield started the day at the 1.84% level.
While it’s great to see bonds bounce back it’s not the bounce that usually leads to reversal. Today’s rally is based on the attack on the Saudi Arabia oil refineries and typically bond gains reverse course once the geo-political risk is resolved or the market believes it won’t last much longer.
September 17th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 100.97, and the FNMA 3.5 coupon started the day at 102.30. The 10y Treasury yield started the day at the 1.81% level.
September 18th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.09, and the FNMA 3.5 coupon started the day at 102.36. The 10y Treasury yield started the day at the 1.80% level.
It’s goof to see the bond market open in positive territory however it won’t matter unless it holds post Fed decision. Generally speaking; lenders are ignoring these bond market gains because they know all this could get reversed later today. In fact if the news from the Fed is a negative for bonds there is a good chance we could see the 10y yield push significantly higher.
September 19th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.14, and the FNMA 3.5 coupon started the day at 102.38. The 10y Treasury yield started the day at the 1.76% level.
September 20th, 2019:
Mortgage Backed Security FNMA 3.0 started the day at 101.02, and the FNMA 3.5 coupon started the day at 102.31. The 10y Treasury yield started the day at the 1.79% 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 mortgage rates.
On Monday we have the NY Fed Manufacturing Index, On Tuesday we have Industrial Production and the NAHB Housing Market Index. On Wednesday we have the weekly Mortgage Market Index. Housing Starts and Building Permits. Also on Wednesday is the Fed decision (releases 12pm PST-more on this below). On Thursday we have the weekly Unemployment claims, Philly Fed Index and Existing Home Sales. There are no major economic reports set to be released on Friday.
New York Fed Manufacturing Report:
Expectations were for a reading of 4.00 after last months 4.80% reading however the final reading for this month came in at 2.00.
Last month the Industrial Production report came in at -0.2% and expectations for this month were for a reading of +0.2%. The final reading came in above that; +0.6%.
NAHB Housing Index:
The reading came in at 68 and market expectations were for a reading of 66. Last months reading was 66.
Mortgage Market Index:
The reading for the Mortgage Market Index came in slightly lower than last week. This morning’s reading was for 569.5 and last week the reading came in at 569.8. The Purchase component came in at 269.7 (last week it was 253.5) and the Refinance component came in at 2274.1 (last week it came in at 2377.5). The average 30 year fixed mortgage rate increased from 3.82% to 4.01%.
Housing starts increased in the last survey to 1,364,000 (annual rate) after last months reading of 1,191,000 units (annual rate). Expectations were for a reading of 1,250,000 units (annual rate).
Building Permits also increased. This morning’s reading came in at 1,419,000 (annual rate) and last month the reading was at 1,300,000 (annual rate).
Philly Fed Index:
The Philly Fed Index came in at 12.0 (expectations were for a reading of 11.0). Last month the reading came in at 16.8 and the previous month the reading came in at 21.8.
The weekly report showed 208,000 unemployment claims after last weeks reading of 208,000.
Existing Home Sales:
Market expectations are for a reading of 5,370,000 home sales (annual rate) after last months reading of 5,420,000 home sales (annual rate).
Expectations For The Fed Meeting:
Let’s just get this out of the way: it is unlikely that that mortgage rates will improve if the Fed lowers on Wednesday. Recent data suggests the economy is doing “ok” and current bond market levels reflect the likely-hood that the Fed will lower later this week.
Is there a chance mortgage rates will improve if the Fed lowers?
Absolutely; nothing is for certain but it’s important to keep things in perspective when trying to understand the direction of mortgage rates and how that influences your decision making.
From October 2018 – August 2019 mortgage rates moved significantly lower without much disruption. Bond yields and mortgage rates don’t move lower forever nor do they usually move lower for that long of a period. The bond market sent a clear signal last week that we reached a bottom. Unless economic data gets worse during the last three months of 2019, the best we can hope for during this time is bond market and mortgage rate stability.
California homeowners and homebuyers looking for a low rate mortgage are still in luck. Mortgage rates in California may not be at their recent lows but they are near them and significantly better than they were last October.
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