Last week mortgage interest rates improved thanks to Janet Yellen indicating at her confirmation hearing that as our next Fed head, she will continue on with QE and support the Fed’s actions of buying mortgage backed securities to keep mortgage interest rates artificially low. This was sweet news to the markets and we’re still seeing lower mortgage rates this morning.
This week is packed with data that may drive mortgage rates higher or lower, including the Fed meeting which wraps up on Wednesday. It’s highly unlikely the Fed will make any changes to the Fed Funds Rate. Traders will be waiting for clues on when tapering may begin (it’s estimated will be pushed out to March 2014). Remember, mortgage interest rates are based on bonds (mortgage backed securities – MBS) and change throughout the day, just like stocks do. It’s not unusual to have bonds react opposite of the stock market as investors will often trade the safety of bonds for the potential return found with stocks (and the reverse is true).
The Fed made no changes to the Fed Funds rate… no surprise there. However, the Fed did surprise the markets today announcing they are not tapering their purchasing of mortgage backed securities. From today’s press release:
“…Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. [Read more...]
I hope you are having a wonderful summer. Our Seattle summer has been just beautiful – I don’t even mind the few days of rain we’ve had sprinkled in. Anyhow, you’re not reading this post for a weather report, are you? Let’s get back to what may impact mortgage interest rates this week! Today and Tuesday, we don’t have any economic indicators scheduled to be released. Wednesday is the big day with the minutes from the last Fed meeting being released.
This week is packed full of economic data that may dramatically impact mortgage rates. Not only do we have the results of the Fed meeting on Wednesday, we wind up the week with the Jobs Report on Friday. I anticipate this will be another volatile week for mortgage interest rates.
This morning, mortgage backed securities are recovering from Friday’s fiasco following the better than expected Jobs Report. On Wednesday, the minutes from the last Fed meeting will be released which may set mortgage rates off on another roller coaster ride.
Here are some of the economic indicators scheduled to be released this week:
Wednesday, July 10: FOMC Minutes
Thursday, July 11: Initial Jobless Claims
Friday, July 12: Producer Price Index and Consumer Sentiment Index (UoM)
On Saturday, July 13: I’ll be teaching at a Home Buyer Education Seminar in West Seattle at the High Point Library from 11:00 am – 4:00 pm. If you would like to learn more about the home buying process or need help with down payment assistance, I encourage you to attend our Washington State Housing Finance Commission sponsored class!
As of 10:00 am this morning, July 8, 2013, the DOW is up 67 at 15,203. Mortgage rates are improved from Friday by about a 0.425% in fee (based on the 4.750% quote).
For a 30 year fixed rate based on a loan amount of $400,000 and an 80% loan to value with 740 or higher credit scores for a purchase in Seattle closing by August 15, 2013, I’m quoting:
- 4.625% (apr 4.796%) priced with 1.121 points; or
- 4.750% (apr 4.839%) priced with 0.182 points
Remember, mortgage rates change constantly and may have changed by the time I publish this post. For your personal rate quote with current pricing for your home located in anywhere in Washington, please click here.
This morning’s Jobs Report came in stronger than expected with 195,000 non-farm payroll jobs added in June vs the 166,ooo with positive revisions to May and April. The Jobs Report also revealed that average earnings are edging higher. This data helped mortgage rates continue on their upward trend and although rates are still historically low, we seem to be getting closer and closer to the 5% range for a 30 year fixed.
As of the writing of this post (2:00 pm on Friday, July 5, 2013) I’m quoting 4.750% (apr 4.876%) priced with 0.608 points for a purchase in Seattle. Here’s my rate tweet that I just posted:
This is 0.375% higher in rate than what I quoted on Monday or 2.34% higher in fees (discount points) as shown below.
Today, if you really want “Monday’s rate” of 4.375%, you can still have it…if you’re willing to pay 3.234 points which based on a loan amount of $400,000, this would cost $12,936 (apr 4.730%).
If you have been considering refinancing, you may want to do so soon! Rates have been moving higher ever since the Fed indicated they may pull back on their bond buying program which has kept rates at artificial saccharin sweet low levels for the past couple years.
Borrowers who have lower credit scores or higher loan to values are probably already seeing rates in the 5% range do to pricing adjustments (LLPAs) for conventional mortgages.
If you would like me to provide you with a rate quote for your purchase or refinance for your home located anywhere in Washington, I’m happy to help you!
Around 11:00 am PST, we will have the results of the two day FOMC meeting. Following the Fed’s announcement, Ben Bernanke will be holding a press conference. Both of these events are expected to influence the markets and impact the direction of mortgage rates.
I will do my best to cover these events and how they impact rates today via this “live” post… check back!
As I write this post, 9:55 am on June 19, 2013, MBS (mortgage backed securities are down about 25 basis points and the DOW is down 27 bps at 15,290.
Rates for a 30 year fixed conforming loan of $400,000 with an 80% loan to value based on credit scores of 740 or higher for a purchase closing in Seattle by July 26, 2013 as of 10:00 am are (now expired – scroll below for current rates):
- 4.000 priced with 1.233 in discount points (apr 4.173%)
- 4.125% priced with 0.231 in discount points (apr 4.340%)
It’s interesting that there is a full point difference in pricing with just 0.125% in interest rate.
Remember, mortgage rates change often – sometimes several times a day. For your personal rate quote for homes located in Bellevue, Renton, Seattle or anywhere in Washington state (where I’m Licensed to lend), click here.
11:06 am: mortgage backed securities (30 yr) are down 66 basis points and the DOW is down 54 following the release of the Fed’s statement.
“To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
…. the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal….”
As of 11:15 am, I am still quoting the same rates as what I posted at 10:00 am. However, with how MBS have deteriorated, I’m surprised I’m still able to offer pricing that was available prior to the FOMC’s statement. This could change at any moment.
Coming up next…. Ben Bernanke’s press conference…. stay tuned!
12:07 pm: DOW is down 136. Mortgage rates are up about 0.25% (roughly) in fee from this morning’s quote as illustrated below. [NOTE: another price change has happened since this quote...scroll down]
- 4.000% 30 year fixed priced with 1.458 discount points (apr 4.192%).
- 4.125% 30 year fixed priced with 0.595% discount points (apr 4.245%).
If you would like a mortgage rate quote with current rates for your home located in Washington state, please contact me.
1:04 pm: DOW closes down 206 at 15112. MBS down 128 basis points. Mortgage rates continue to deteriorate today. Rates are up about 0.125% in rate or 0.8% in fee from this morning’s original quote.
- 4.000% 30 year fixed priced with 2.026 points (apr 4.241%). This is 0.793% more in fee than my first quote this morning.
- 4.125% 30 year fixed priced with 0.966 points (apr 4.277%). This is 0.371% more in fee in just an hours time – based on a $400,000 loan amount, it’s an increased cost of $1,484.
4:00 pm. Rates continued to trend higher today.
- 4.000% 30 year fixed priced with 2.392 points (apr 4.273%).
- 4.125% 30 year fixed priced with 1.561 points (apr 4.328%). A leap of 1.33% in fee from this morning’s first quote.
- 4.250% 30 year fixed priced with 0.745% points (apr 4.385%).
By the way, throughout the day the quotes I provided are from different banks or lenders that we work with depending on who was offering the most competitive rate at that time based on the scenario I provided. If I was limited to one source for rates (like most bankers and credit unions are) I would be posting even more dramatic rates. The bank from my first quote is currently offering 4.000% with 2.636% in discount points (apr 4.294%). And the bank who had the best rate at 1:00 today now has even higher pricing than the first bank. I’m glad I work for a correspondent lender where we have many lenders and banks and their pricing and programs to select from.
Let’s see what tomorrow brings for mortgage rates!