Consumers Financial What Happened to Rates Going Up This Year?

What Happened to Rates Going Up This Year?

At the beginning of the year everyone thought rates were going to go up. That just hasn’t happened. Since November of 2016 interest rates haven’t moved up or down more than .3%. With the best interest rates between 3.1% and 4.0% APR, mortgages are still very affordable for most people. While some people would like to speculate rates rising back to the double digits of the 1980’s, the current trend shows otherwise.

Consumers Financial Company What Happened to Rates Going Up This Year?

Since 2008 the federal government has been subsidizing mortgage rates, this trend is not likely to change as big banks have no interest in earning single digit rates on their investments. Part of the reason financial analysts were so sure rates would rise this year was that 2017 marked the beginning of bigger plan to take Fannie and Freddie out of conservatorship. Turning these entities back into public companies would require that rates rise to attract private investment.

To date, no one has come up with a plan on how this will happen without destroying the housing market. I talked a lot about this in other blogs as it relates to a similar problem that Japan faced in 1991. Simply put rates may never go up, now that we’ve duped the American taxpayers into being the bank.

If you have been waiting to refinance or still have mortgage insurance you should take a look while mortgage rates are still low. Call me for custom options at 801.599.5363 today or get a Quick Quote today!

Consumers Financial Company What's Really Mortgage Rates up at Night?

What’s Really Keeping Mortgage Rates up at Night?

Interest rates surged to 2-year highs last week, apparently in response to news that OPEC countries struck a deal to limit oil production. True, if OPEC is willing to do what it takes to push fuel prices higher, it only adds to the inflationary fears already pushing rates higher. But even as OPEC dominated this week's headlines, there are more important things keeping housing and mortgage markets up at night.

Consumers Financial Company What's Really Mortgage Rates up at Night?

Financial markets are understandably very interested in the stuff that fuels the movement of goods around the world.  The massive drop in oil prices at the end of 2014 saw the healthy interest grow into an obsession, with far too many market movements being forced to fit the oil price narrative.  It's a seductive thesis, especially for interest rates, given oil's inflation implications.
Oil prices do indeed have strong correlations with interest rate movements. Last week was a good example of that, as we'll see in the following chart.
But the chart also shows that this week's correlation is a small drop in a much bigger bucket.

At the end of the day we can still get rates in the low 4’s and even in the 3’s on the 15-year, but as gas prices rise so will rates. Call me for custom options at 801.599.5363 today or get a Quick Quote today!

Consumers Financial Company Mortgage Rates Hit 2017 Lows

Mortgage Rates Hit 2017 Lows

Consumers Financial Company Mortgage Rates Hit 2017 Lows

Rates have been rising for the last 6 months until now and here is why: when Trump won the election, investors made assumptions about the future of the stock market and monetary policy. This caused stocks to rise rapidly which has a negative effect on mortgage rates. The result was that mortgage rates rose to over 4% on most programs.

Just this week, geopolitical concerns (which tend to help rates and hurt stocks) have been added to the mix with several potentially alarming headlines.  In a very brief time, the US has bombed Syria, been threatened with nuclear weapons by North Korea, dropped the biggest available non-nuke in Afghanistan (some speculate as a show of force), sent an "armada" of warships to East China Sea (an overt show of force), and expressed that relations with Russia are at an all-time low.  
What happened next was a total surprise and President Trump made a public comment that the US Dollar is “too strong.” This sent mortgage rates to a new low for 2017 as the market was already in rally mode. This is due to the tendency for rates to go down if the value of our currency goes down.

All this means that if you have been waiting for that 3-point-something interest rate, your wait is over and you can now get back in on yesterday’s gravy train. Call me for custom options at 801.599.5363 today or get a Quick Quote today!

Mortgage Rates Rise as Bond Yields take a Thelma and Louise Nose Dive

Rates have risen significantly since March 7th, with many programs up over 3% since the first of the month. First off, the US Jobs market continues to show strength which gave the FED good reason to raise rates again next month. As if that didn’t hurt mortgage rates enough, what’s really got the market worried is what can happen on March 13th as we approach the US Debt Ceiling limit. That’s because since 2008 our banks and investment firms have had the US government borrowing money to lend on mortgages. With President Trump currently reevaluation of the financial markets, will he continue to let the US Government go into debt? If so then we are back to normal. But if not the implications are, for lack of a better quote, “HUGE!”

In other words, if the US Tax Payer isn’t going to borrow money to lend on mortgages, then the Banks will have to buy them. With rates in the 3%'s that doesn’t get anyone on Wall Street excited. Rates could rise rapidly this week if some solution isn’t met quickly. For now, rates are over 4.25%APR with most programs except the 15 Year which is still hovering around 3.6%APR.

If you have been waiting to refinance or still have mortgage insurance you should take a look while mortgage rates are still low. Call me for custom options at 801.599.5363 today or get a Quick Quote today!

FED Hikes and Stock Rallies Raise Rates

cfc_16-06_headshot_matt01_webMortgage rates have risen sharply since early November for a couple of reasons. First, you should understand that the better the economy is, the more likely it is that interest rates will rise. Trump’s win in the election sent the stock market to new highs as investors saw the possibility that promised tax cuts will improve long term profits.

Secondly, the FED has been eluding to higher rates since last spring, and in December this became a reality as they raised short term interest rates for the first time in a year. By the FED’s next meeting last week their policy statement made it clear that job growth and inflation are still a concern, leading investors to believe that there is still room for more rate hikes this year. That said, there isn’t any indication that will happen right away. This helped level off interest rates, bringing some stability to the market.

Housing data appears to show that Pending Home Sales improved by 1.6 percent in December. This puts our current housing numbers at historically healthy levels.

Everything said, this means you can still get an APR under 4% on 15 year loans and in the low 4’s with the 30 year programs.

If you have been waiting to refinance or still have mortgage insurance you should take a look while mortgage rates are still low. Call me for custom options at 801.599.5363 today or get a Quick Quote today!

Are Oil Prices Greasing the Interest Rate Wheel?

As we are now in a world were interest rates are going up there is a lot of talk in the financial markets speculating about how much they will rise and what are the factors that are driving them behind the scenes.  With so many political and financial factors in such a short amount of time it can be easy to look for short term colorations, in other words a scapegoat to ease our collective minds and quantify what is likely to happen but you may be surprised to find that the truth is a little harder to put our collective finger on.

So now that the election results have worked their way through the system a little more and the US markets have started to stabilize it can be easy to think that’s where the story ends but alas no.  So, with the specter of rates still going up, the markets started looking for another reason and landed on OPEC recently cutting production and the historic correlation between oil prices and mortgage rates, but is this the real reason?

Financial markets are understandably very concerned with anything that can raise the cost of moving goods around the world. And with the massive drop in oil prices in 2014 a lot of things that may have never been related to Oil prices have now been viewed through that lens with mortgage rates being no exception.  It’s always a compelling idea to be able to think we’ve found a key to understanding the markets by watching something as omni-important as Oil and its pressures on markets and inflation around the globe but again being compelling doesn’t make it true even if it calms fears in some quarters.

So, what is it then if not oil or the recent election? Is there truly no way to know what the lay of the land for lending may be going forward?  The truth is that it is complicated by so many more factors and like anything that has a lot of ingredients it’s hard to know exactly what’s going to come out of the oven and what the effect will be going forward. That said there are some things we know for sure, let’s take a look.

So, first and foremost the ECB (European Central Bank) said it was going to review how they are dealing with “asset purchases” and the likely implication here is that they are going to taper their purchases of financial assets and of course this is almost certainly going to raise rates across the globe. This is something that most serious market watchers have expected and some may argue is overdue but again there is no doubt the effect is likely to raise rates. Number two despite the recent stabilization there is still a large amount of uncertainty in the markets of what the implications of the new administration will be and uncertainty almost always leads to higher interest rates. And lastly rates have been held artificially low for so long that it may well not be feasible to keep them at these deflated levels forever without doing damage to the lending sector around the world and having that effect reflect itself in depressing markets around the world.  There is and has been a growing chorus of people around the world saying it’s now time to take off the training wheels and let rates find a less managed balance.

With all of that factored in the point here is that we are likely to continue to see rates rise and we are again likely to be looking at a world of rates that are closer to what we saw in the surplus days of the 1990’s. We who have been watching a long time don’t expect crippling rates in the near future but if you want to tell your kids down the road how you got your loan when rates where in the 3% range than this may well be your last chance.

If you have been waiting to refinance or still have mortgage insurance you should take a look while mortgage rates are still under 4% APR. Call me for custom options at 801.599.5363 today or get a Quick Quote today!

Trump Trumps Mortgage Rates to 6 Month High

Mortgage Rates Spike to a 6 Month High as the Dollar rallied on news Donald Trump is the new President Elect of the United States. Bonds tanked early as the market opened and on the heals of last weeks healthy gains in employment. Strong increased average wages has the FED ready to raise interest rates. The US economy added 161,000 new jobs in October and the unemployment rate fell below 5%. Wages rose 2.8% over the past year, the fastest 12-month increase since June 2009.

Atlanta Fed President Dennis Lockhart spoke to a group of Realtors in Orlando, calling the report a “solid” outcome. The Fed has already stated that it intends to raise interest rates in December.

Fed officials believe that the unemployment rate is close to the level where inflation may spike if rates don’t move up. As the labor market tightens the fear is that rising wages will cause wide spread inflation.

If you have been waiting to refinance or still have mortgage insurance you should take a look while mortgage rates are still under 4% APR. Call me for custom options at 801.599.5363 today or get a Quick Quote today!

Are Rates ready to finally make their move? Financial markets are out of patience…

cfc_16-06_headshot_matt01_web
Over the past few weeks, we've increasingly witnessed a consolidation in bond markets. (That's a fancy way of saying interest rates have been less and less volatile.)  When we look at this on a chart, and if we draw lines resting along the highest and lowest interest rates, the lines converge on a single point.  More often than not, rates will break forcefully higher or lower before reaching that point. If the analogy works for you, think of this like squeezing a spring between your thumb and forefinger.  The space occupied by the spring gets smaller and smaller until one side slips.  The spring could launch in either direction.

As of last week's Jackson Hole Symposium (where the Fed often shares some more candid thoughts about monetary policy), interest rates could scarcely have been compressed any further. When the Fed Chair's speech was made, rates moved lower at first, but shortly thereafter, the Vice Chair framed that speech in a different context.  Basically, "Hey everyone! Yellen (the Fed Chair) just said we're going to hike rates in 2016!" is what was stated, and rates moved quickly higher in response.

However, additional comments from Vice Chair Fischer helped everyone calm down. The end of any given month also tends to be more rate-friendly, because certain investors are required to hold a certain amount of bonds for their official month-end reporting (higher demand for bonds equates to lower interest rates).

So as September began, rates moved higher immediately only to be sent tumbling back to the previous floor by exceptionally weak economic data on Thursday (ISM Manufacturing).  Then on Friday, the big jobs report came in below its forecast; something that would normally help rates move lower, or at least hold their ground. Instead, rates began rising back toward recent highs, suggesting that markets may be have simply decided "it's time" to break out of the consolidation pattern, regardless of the quality of the evidence.

Does all this Fed-related interest rate drama matter for the housing market? Absolutely! At first glance, it might not seem like housing would respond too much to interest rate volatility, but in the bigger picture, the correlations are undeniable.  Not only are rates, themselves, a factor, but market psychology can also have a bearing on the strength of the housing market. Incidentally, a longer term chart of the Pending Home Sales data that came out this week helps illustrate the point.

Apart from the home buyer tax credit distortions in the immediate wake of the financial crisis, the most notable changes in the Pending Home Sales Index have followed the major Fed policy developments. In 2013, the Taper Tantrum clearly took a bite out of sales, and then the Fed's rate hike rhetoric in 2015 aligned with the next salient decrease in activity.

The reality is, we are still experiencing historic low rates. Click Here for free options about how rates can help your situation or call me direct at 801.599.5363.