The Home Loan Mortgage Blog

Weekly Update - 7/5/19

July 5th, 2019 9:53 AM by T. Fanning



Hey,

Rates were again mixed this week. Next week has a bunch of events scheduled that may cause a noticeable move in mortgage rates. There is nothing of relevance set for Monday but several days have items showing that are important enough to make it a very busy week for the markets and mortgage pricing. They include economic releases, the FOMC minutes, a congressional appearance by Fed Chairman Powell and a couple of Treasury auctions.*

We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans; FHA and VA 1x Close Construction-Perm; 1% Down Conventional Program; 1.50% Down FHA Advantage Program; CHFA Financing; Down Payment Protection program; HomeStyle renovation program; and a jumbo, 5% down program. We also can do hobby farms, Ag properties and Alt-A (stated income, verified assets for self-employed borrowers)! To see a detailed list of programs, visit our website:  www.hlmcolorado.com/mortgageprograms

As always, please let me know if I can help you/friends/family/potential buyers/borrowers!
                

Last Updated: 7/5/19

Friday's bond market has opened sharply lower following stronger than expected employment news. The major stock indexes are reacting negatively also, pushing the Dow down 163 points and the Nasdaq down 64 points. The bond market is currently down 31/32 (2.05%), which should cause an increase in this morning's mortgage rates of approximately .250 - .375 of a discount point over Wednesday's early pricing. The markets will closed yesterday for the Independence Day holiday.

Today's major economic data was June's Employment report at 8:30 AM ET. It revealed a couple of big surprises in the headline readings. First, the bad news was the 224,000 new payrolls that greatly exceeded forecasts of 160,000 jobs. This figure is taking centerstage as it is strong enough that many analysts now have removed the possibility of a Fed rate cut at this month's FOMC meeting.

A bit of goods news came from the 0.1% increase in the unemployment rate that was expected to hold at 3.6%. Very good news came in the average hourly earnings increase of only 0.2%, falling short of the 0.3% that was expected. The year over year rate for this reading moved to 3.1%, which was also slightly below expectations. Both of these headline numbers are good news for bonds and mortgage rates. However, the markets are reacting mostly to the payroll number that blew past predictions and may have altered the Fed's game plan with short-term interest rates.

It appears the markets had built in weaker than expected numbers before today's release. This morning's move in bonds is a little stronger than we would expect considering the favorable earnings data that has drawn an equal amount of attention as the payroll number during recent releases. A negative move would not have been a surprise, but the weaker earnings reading is arguably more relevant to the bond market than the payroll number. Therefore, the size of this morning's sell-off is surprising.

Also worth noting is the fact that if this morning's spike in bond yields holds throughout the day, it will be the third time the benchmark 10-year Treasury Note has failed to stay below 2.0%. That is a concerning sign and may actually be a warning that higher yields and mortgage rates may be near. The day is still early, but closing above 2.0% today should be taken as a cautionary sign.

Next week has a bunch of events scheduled that may cause a noticeable move in mortgage rates. There is nothing of relevance set for Monday but several days have items showing that are important enough to make it a very busy week for the markets and mortgage pricing. They include economic releases, the FOMC minutes, a congressional appearance by Fed Chairman Powell and a couple of Treasury auctions. Look for details on all of next week's activities in Sunday evening's weekly preview.

If I were considering financing/refinancing a home, I would....

Lock if my closing were taking place within 7 days...
Lock if my closing were taking place between 8 and 20 days...
Lock if my closing were taking place between 21 and 60 days...
Float if my closing were taking place over 60 days from now...

This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.*

*http://www.hlmcolorado.com/DailyRateAdvisory




LO NMLS: 208694 | CO License: 100008854 | Company NMLS ID: 479289
Regulated by the Colorado Division of Real Estate
www.nmlsconsumeraccess.org
Posted in:General
Posted by T. Fanning on July 5th, 2019 9:53 AM

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